In 1964, the same year that Beatle mania reached US shores, Tokyo hosted the 18th Summer Olympics and Martin Luther King Jr was awarded the Nobel Peace prize, the Southern African nation of Zambia – formerly Northern Rhodesia – was formally recognised as an independent republic, under the leadership of President Kenneth Kaunda. His tenure spanned 27 years, after which Zambia became a multi-party state, in 1991.

The landlocked country shares its borders with Angola, Botswana, the DRC, Malawi, Mozambique, Namibia, Tanzania and Zimbabwe, with which the Zambezi forms a natural riverine boundary. Its 743 398 km² of land is home to a population of 20.216 million – 42.49% of whom are under the age of 15, and just 2.74% aged 65 or older.

Zambia also has one with one of the highest levels of urbanisation in Africa, at 46.3% of the total population and an estimated annual rate of change of 4.15%. More than 3.18 million people reside in Lusaka, the nation’s capital. Zambia also has a high fertility rate, ranking 19th globally, and is classified ‘very high’ in terms of the degree of health risk. As recently as March this year, the US Centres for Disease Control and Prevention issued a travel alert for polio in Africa, and identified Zambia as high risk in terms of circulating vaccine-derived polio viruses to travellers.

While Zambia is regarded a lower middle-income economy with extreme rural poverty, it is not all doom and gloom. Zambia is a nation endowed with plentiful natural and mineral resources, as well as a young and fast-growing labour force.

In a move to boost economic growth, the Zambia Development Agency (ZDA), an institution that falls under the Ministry of Commerce, Trade and Industry, has identified priority sectors, namely mining, manufacturing, tourism, energy and agriculture.

Zambia’s industrial sector, of which mining, construction and manufacturing are subsectors, accounts for an estimated 42.5% of GDP and 10.5% of employment. The country is the second-largest copper producer on the continent (after the DRC), a mineral that generates three-quarters of its export earnings.

‘While the country’s industry sector, especially mining, was negatively impacted during the early stages of the pandemic, high copper prices and the reintroduction of measures allowing mining royalties to be deducted from corporate income tax have supported investment in the mining sector, which showed a significant recovery in 2022,’ the Standard Bank Trade Club platform notes in its 2023 Zambia report.

A commentary published this year by Brookings explains that in the years preceding the 2021 election of the current Zambian president, Hakainde Hichilema, the profitability of Zambia’s mining sector had certainly been dampened by a series of fiscal policies rolled out by the government, resulting in companies withholding US$650 million of investment in 2019 alone, and divestment from firms such as Vedanta and Glencore. Hichilema, however, ‘set out the goal of expanding Zambian copper production from 800 000 tons per year to 3 million, over a decade’, according to the report.

‘Under his leadership, Zambia developed a policy environment that is conducive to attaining this goal. A review of the mining tax framework brought taxation to a stable and competitive level and ended double taxation. In a show of support not just to the mining sector but for increasing investment along the mining value chain, in April 2022, Zambia also signed an MOU to leverage resources and build a regional value chain for electric vehicle batteries with the DRC.’

These measures appear to be working, evidenced by a recent surge in mining investment activity. Quantum Minerals, for example, announced a commitment of US$1.3 billion for the development of a nickel mine, accompanied by a significant expansion of copper production. Barrick Gold has also embarked on an ambitious production expansion initiative, based on the premise that the newly adjusted tax framework will free up additional cash flow, which will be employed to prolong the operational lifespan of the Lumwana mine, expanding it from 2042 to 2060. These investments, it adds, ‘will upscale production and generate much-needed fiscal revenue’.

The majority of the country’s copper mines are concentrated in the Copperbelt province, and other mineral resources include gold, zinc, lead, iron ore, manganese, nickel, coal and gemstones, among them diamonds and emeralds.

Tourism is another key sector on which the Zambian economy depends. The ZDA highlights that the country has 20 national parks and 34 game management areas, with a combined 23 million ha of land set aside for wildlife conservation. And, of course, it is home to the Mosi-oa-Tunya – or Victoria Falls, as it’s more commonly known – one of the Seven Natural Wonders of the World and a UNESCO World Heritage site, described by the organisation as the ‘largest curtain of falling water’ on Earth.

In April this year, Zambian Business Times reported a rebound in tourist arrivals in 2022 compared to 2021, although levels are yet to surpass those of pre-COVID-19.

‘Zambia Airports Corporation Limited [ZACL] served […] about 1.7 million passengers in 2022 compared to about 750 000 passengers in 2021,’ according ZACL acting MD Maggie Kaunda. That is in contrast to around 1.9 million passengers in 2019.

Passenger statistics in 2022 represented an overall recovery of 89% to pre-COVID-19 levels, compared to recovery levels of 41% in 2021 and 29% in 2020. International arrival recovered by 83% and domestic by 111%, with Kenneth Kaunda International and Solwezi airports recording the highest recovery rates, at 96% and 121% respectively.

Another of important focal area of the ZDA’s strategy is energy. According to data, research and analytic consultancy Fitch Solutions, ‘Zambia’s non-hydropower renewables capacity is expected to grow rapidly in the next decade. This is due to government announcing plans to further diversify its electricity production sources by focusing on solar power’.

Currently, Zambia relies heavily on hydropower – at more than 80% of its electricity output, and it also exports energy to Botswana, Zimbabwe, Namibia and the DRC. Yet being reliant on hydropower, in the face of climate change, makes it susceptible to electricity supply shortages during the dry season. Indeed, Zambia experienced pro longed power cuts at the start of 2023, as a result of low rainfall. Renewables, however, account for less than 2% of the total electricity generation in Zambia’s market.

Recently dubbing it the ‘renewables market to watch’ within the sub-Saharan African region, Fitch notes that ‘we forecast that, within the next decade, Zambia’s capacity will increase by slightly more than 1 GW between 2023 and the end of 2032. Solar PV capacity will account for slightly more than 600 MW of this increase, with the remainder coming from the completion of the Kafue Gorge power plant’.

According to Fitch’s research, Zambia has least 12 renewable energy projects at the pre-construction stage, collectively accounting for a total capacity of 1.5 GW – including 900 MW allocated to solar and 130 MW dedicated to onshore wind pro jects. ‘The solar PV and wind energy hybrid project in Solwezi is the largest project in Zambia’s renewables [key project data], and is expected to be commissioned in 2025.’

Reliable energy is, of course, critical to mining, manufacturing and tourism, as well as agriculture.

Despite Zambia being a heavy hitter in the mining arena and a tourism attraction, it’s the country’s agricultural sector that is the backbone of its economy, according to Standard Bank, for the simple reason that while the industry represents just 3.4% of Zambia’s GDP, it employs a significant 49.6% of the workforce. Of Zambia’s 75 million ha of land, 58% is classified as medium- to high-potential for agriculture production. There the focus is primarily on crops such as maize, cotton, soya bean, tobacco, groundnuts, paprika, sorghum, wheat, rice and sunflower seeds; livestock production; and fisheries. In addition, Zambia is one of the biggest seed exporters on the continent. However, as the Standard Bank report explains, ‘agriculture in Zambia remains largely underexploited, with only 15% of its potential arable land under cultivation. The sector’s low contribution to GDP is attributable to poor rural infrastructure and extreme vulnerability to drought’. The overwhelming majority of Zambia’s agricultural producers, approximately 90%, are small-scale farmers.

According to Rabecca Banda, an associate in legal practitioners Corpus’ energy, resources and infrastructure department, Zambia’s 2023 National Budget incorporates a number of progressive reforms aimed at enhancing agricultural prosperity.

These include the introduction of the Com prehensive Agriculture Support programme; the revival of farm blocks; a focus on infra structure; and tax concessions on income generated from local sales of corn starch by agroprocessing businesses operating in multi-facility economic zones, industrial parks and rural areas. Furthermore, she says, ‘in order to increase production among small-scale farmers, the government has proposed to recruit extension officers through which government will provide 1.5 million small holder farmers with extension services via physical visits and e-extension platforms, with a view to increasing crop productivity among small-scale farmers’.

The various reforms and strategies initiated by the government are shining a light at the end of what has been a somewhat dark and long period over recent years. According to the Standard Bank report, Zambia’s economy grew in 2021; a positive trajectory that carried into 2022, reaching a GDP growth rate of 2.9% in the latter part of the year, driven largely by recovery in the country’s key sectors. In 2023 and 2024, it adds, ‘growth is expected to pick up to 4% and 4.2%, respectively, with private consumption being its main driver’.

By Nicola-Jane Ford
Images: Gallo/Getty Images, Chendeni Bush Camp