Zambia's economy demonstrated resilience in 2024, achieving a growth rate of 4% despite challenges such as a historic drought and frequent power outages. This information comes from the latest Zambia Economic Update (ZEU) by the World Bank Group (WBG), titled "Leveraging Energy Transition Minerals for Economic Transformation." The report attributes this growth to a recovery in the mining sector and an expansion in services.
Agriculture, although crucial for employment in Zambia, faced difficulties due to its reliance on rainfed farming. However, its limited contribution to GDP allowed overall economic growth to persist. Despite this progress, GDP per capita growth slowed to 1.2%, and poverty remains widespread with 63.1% of the population living below the $2.15 poverty line.
Albert Pijuan, World Bank Senior Country Economist for Zambia, stated: “Notwithstanding these challenges, it is commendable how the government of Zambia has stayed fiscally disciplined amidst increasing financing needs caused by the drought, within the framework of ongoing debt restructuring and an IMF program.” He noted that increased copper production contributed to revenue growth, although revenues remain below potential levels.
The ZEU report also addresses inflation issues exacerbated by exchange rate depreciation and rising food and energy prices during the drought. Despite efforts to control inflation through monetary policy tightening, prices continued to rise.
Looking ahead, optimism is driven by momentum in mining, a rebound in agriculture, and tourism improvements. Nonetheless, risks include lower global growth and climatic uncertainties. To accelerate economic transformation, diversification beyond mining is necessary.
The ZEU recommends enhancing agricultural productivity through private-sector-led financing and transitioning fully to an e-voucher system; boosting energy sector competition; strengthening revenue administration; and maintaining monetary policy tightening.
Over a year ago, WBG began collaborating with the Government of the Republic of Zambia (GRZ) on a roadmap titled "Repositioning Zambia to Leverage Energy Transition Minerals for Economic Transformation." This roadmap aims to maximize benefits from Zambia’s mineral resources while expanding participation in the entire ETM value chain.
Achim Fock, World Bank Country Manager for Zambia, emphasized: “Zambia’s economy needs to diversify but concurrently making the most of Zambia’s green mineral deposits would provide a major boost...and must also be leveraged for economic transformation.”
To maximize ETM potential, recommendations include scaling ETM production through comprehensive reforms; maximizing fiscal potential via strengthened revenue management; and adding value by developing the copper value chain while addressing barriers such as raw material access and investment climate inefficiencies.