Zambia

Rebound in growth on back of investment and exports

Growth is expected to rebound strongly in 2025 after the drought that severely affected the operation of hydroelectric power stations and agricultural production, which, like manufactured goods (fertilisers, agri-food, copper-based components, etc.), which contribute increasingly to export revenues. Export revenues are on the rise, boosted by high copper prices (40% of the total) and increased extraction volumes thanks to the opening of new mines or the expansion of existing ones, financed by new FDI.

In addition to the copper sector, investments will focus on expanding the electricity grid both in the country and connecting with Tanzania, developing solar and hydroelectric power plants, the largest project being the Batoka Gorge dam on the Zambezi River, on the border with Zimbabwe, and in transport, with the construction of rail corridors aimed at opening up the country, in the east with TAZARA, which will connect Zambia to the port of Dar Es Salem (Tanzania), and in the west with the Lobito corridor (in Angola), which will pass through the Democratic Republic of the Congo (DRC). Domestic road projects connecting the country's major cities, supported by public-private partnerships, will accelerate in 2026 and are expected to be completed the following year. The manufacturing sector is not being left behind: massive investments are being made in economic zones and industrial parks, focused on the production of construction materials, steel, agri-food products, electrical components, batteries and textiles.

Last, private consumption is expected to accelerate further in 2026, thanks to the growing influx of tourists attracted by the Victoria Falls and national parks, but above all to the easing of pressure on the prices of imported goods (particularly fuel) and food. These more favourable conditions are the result of lower global prices, a restrictive monetary policy, the appreciation of the kwacha against the dollar as a result of improved investor confidence, and net inflows of foreign currency from FDI, export earnings and IMF disbursements.

A way out of the debt crisis in sight

After rapidly accumulating debt in the 2010s due to very high public deficits and large infrastructure projects financed by Eurobonds (totalling USD 3 billion) and bilateral loans, mainly from China, public debt reached approximately USD 35 billion (including nearly USD 30 billion in external debt) in 2020. Unable to service debt representing more than 50% of public revenue, Zambia was the first African country to default during the Covid-19 pandemic. A restructuring process, via the common framework of the G20, resulted in an agreement with official bilateral creditors (rescheduling over more than 20 years, rates reduced to 1-2.5% and a grace period of 3 years) and an agreement with Eurobond holders in 2024. At the same time, the IMF's Extended Credit Facility supported macroeconomic stabilisation and structural reforms and was extended by three months until 30 January 2026.

In 2025, despite a comfortable primary surplus, the overall public deficit will widen and deviate from the target set at the beginning of the year due to an increase in exceptional expenditure to settle arrears on fuel purchases and the agricultural programme, as well as interest due on restructured external debt. In 2026, the deficit is expected to narrow: tax revenues will increase thanks to improved mining revenues, the phasing-out of half the exemptions on imported manufactured goods, larger excise duties on alcoholic beverages and soft drinks, increases in administrative fees and taxes on capital movements and firearm ownership. Improvements in public health and education services and the organisation of the 2026 presidential elections will lead to an increase in expenditure, which will be less than the increase in revenue. This, together with the appreciation of the kwacha against the dollar, will trigger a sharp decline in the debt-to-GDP ratio. At the end of September 2025, two-thirds of the country’s debt was held by foreign creditors and denominated in foreign currency: 17% by multilateral creditors, 22% by bilateral creditors (China, the Paris Club, Saudi Arabia and India) and 20% by private financial players. Negotiations are still ongoing with Afreximbank and TDB, whose status as preferred creditors is being contested by Zambia, as the loans in question were taken out at commercial rates, which were sometimes very high.

Last, the current account is expected to return to surplus in 2025 and remain so in 2026, with a larger margin, thanks to export growth. The capital and financial account is in balance: foreign currency inflows linked to FDI (Canada, Australia, the UK, China and the US) are offset by the amortisation of Eurobonds and other commercial loans. The current account surplus therefore translates into an increase in foreign exchange reserves, slightly above the target value of four months of imports.

Economic liberalisation and rapprochement with the West

President Hichilema, who has been in power since 2021, is expected to win the August 2026 elections, with the Patriotic Front (centre-left) – the main opposition party which ruled from 2011 to 2021 – still facing criticism for its mismanagement of public finances, which led the country to default during the Covid crisis. However, the victory of the ruling party (UPND, centre-right) may be less resounding than in the last elections, despite solid economic results, the prospect of an end to the crisis and the president's image of integrity. His reputation has been tarnished by arbitrary arrests of journalists and opponents, as well as by a lack of inclusiveness of growth, which has failed to substantially reduce unemployment and poverty or improve the living conditions of the most vulnerable people in the country.

Hakainde Hichilema advocates a policy of economic openness that helps improve the business climate and attract more foreign direct investment, particularly in the mining, energy and agricultural sectors. This pro-market stance has brought Zambia closer to the European Union and the US, which support these reforms and debt restructuring. At the same time, the country maintains close ties with China, which has been a long-standing partner since independence and is a major player in infrastructure financing and industrial development.

Zambia pursues an active regional policy based on its membership of key African organisations and positive relations with its neighbours. It is a member of the Southern African Development Community (SADC), which comprises 16 countries and aims to promote economic cooperation, political stability and regional security. It also belongs to COMESA (Common Market for Eastern and Southern Africa), which promotes the free movement of goods, services and capital between its member states, and participates in the African Continental Free Trade Area (AfCFTA), a flagship project of the African Union aimed at creating a single market for goods and services across the continent. On a bilateral level, Zambia maintains close relations with the DRC on security and mining trade, with Tanzania on energy and logistics projects, and with Zimbabwe, despite some political tension caused by Zambia's rapprochement with the US, as opposed to Zimbabwe’s preference for Russia. Relations with Malawi, Angola and Mozambique continue to be stable and focus on cross-border trade and infrastructure.

Last updated: October 2025