Zambia - Developing country

Location

Landlocked country (which expands its regional markets for goods and services) located in Southern Africa to the East of Angola, North of Botswana

Member of what trading blocs

Southern Africa Development Community which is a free trade area, member of the Common Market for East and Southern Africa which is becoming a customs union

Value of HDI

0.569 - medium HDI

Pattern in economic growth rate

2020: - 2.8%

2021: 6.2%

2023: 5.4%

Pattern in inflation rate

2020: 15.7%

2021: 22%

2023: 10.9%

Pattern in unemployment rate

2020: 6%

2021: 5.2%

2023: 5.9%

Level of inequality - Gini coefficient

0.515 - where 0 = perfect equality and 1 = perfect inequality, overall income inequality is high in Zambia with the top 10% of the population earning almost 40% of income

% of population living in absolute and relative poverty

Absolute: around 60%

Relative poverty: 64.3%

Recent (2022) Malaria rate

108.4 per 1,000 people at risk

Recent (2023) HIV rate

Adults + children living with it are 1,300,000

Main exports and imports

Exports: Raw and refined copper, Gold

Imports: Fuel, refined petroleum and machinery

Population and expected growth

Currently 19.6 million and expected to double in the next 25 years, one of the world’s youngest countries by median age, and relatively high fertility rate

Value of current account as % of GDP

5%

Name of currency and type of exchange rate system

Zambian Kwacha, floating exchange rate, and overall it has appreciated between 2024-2025 compared to the $USD

Main barriers to further growth and development

• Savings gap - as so many living in absolute/relative poverty

• Primary product dependency and associated issues e.g. Prebisch-Singer Hypothesis as they mainly export gold and copper

• Demographic factors - e.g. rapid population growth causing GDP per capita to decrease

• External debt - as their public investment led growth model relied heavily on debt financing (borrowing)

Strategy for growth and development - (market orientated) mining

By the end of June 2024, Zambia had received mining investment pledges of over $7 billion for new/expansion projects, and this will help boost competitiveness of exports, improving trade balance and therefore their current account deficit.

However there is little opportunity for ‘value added’ with raw materials, and often the jobs in these are industries require long hours with very low wages. Environmental degradation/depletion also needs to be considered. Could mention natural resources curse?

Strategy for growth and development - (market orientated) Removal of govt subsidies

Removal of inefficient govt subsidies to then spend more on ‘social spending’ such as education and healthcare, bringing public services closer to communities particularly rural ones, and removing market distortions

Strategy for growth and development - (Other) Debt relief

In early 2021, Zambia asked for debt treatment under the G-20 Common Framework (CF) to help restore public debt to sustainable levels, and overall this will reduce opportunity cost of paying back debt which could increase if currency depreciates.

Strategy for growth and development - (Interventionist) Infrastructure development

Will help if it is targeted in rural areas as there is a lot of poverty there and it can also help improve thier export capacity, attract FDI flows, create jobs and lead to positive multiplier effect