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Zambia’s Economic Landscape in 2024: Key Indicators and What They Mean for the Future

By Bernadette Deka Zulu

As we approach the end of 2024, Zambia’s economy has seen significant movements, both positive and challenging. This article recaps the major economic events, indicators, and trends of the year, examining implications for the future of our country. From shifts in economic policies to changes in key sectors such as mining, agriculture, and energy, these developments will shape Zambia in the coming years.

  1. Growth Forecast and GDP Performance

The World Bank and the International Monetary Fund (IMF) both projected that Zambia’s GDP growth might rebound a deceleration if economic fundamentals overturn the current pressures and shocks.

Our mining industry which continues to be one of the largest contributors to national revenue, can be said to have performed well, with copper prices remaining relatively strong on the global market. This sector’s strong performance is expected to continue in the medium term, benefiting from increased demand from the global energy transition and infrastructure development in various countries.

However, this growth has not been equally distributed across other sectors. Agriculture, manufacturing, and services remain slow, which is a reminder that Zambia’s economic recovery is heavily reliant on external factors like commodity prices and global economic trends.

What it means for Zambia’s future: While the growth is positive, Zambia needs to diversify its economy to become less dependent on copper and external market conditions. Stronger growth in agriculture, tourism, and the manufacturing sectors is critical for long-term stability and inclusive development.

  1. Inflation and Monetary Policy

Inflation has been one of the key concerns in 2024. Currently at approximately 16.5%, the inflation rate has weakened the domestic currency. Zambia has had to rely on expensive imports of food and electricity to address shortages. Arguably, there could need to highten efforts by the Bank of Zambia to tighten monetary policy and stabilize the exchange rate. Interest rates have been held at relatively high levels to curb inflationary pressures, but this has had a mixed impact on the broader economy.

The exchange rate has been the biggest concern among citizens and businesses, with the Zambian Kwacha depreciating against major currencies like the US Dollar. There is need for positive external factors, including a steady increase in copper exports and the government’s ongoing debt restructuring process, to help to improve investor confidence aswell.

What it means for Zambia’s future: The inflation has to ease, the continued high interest rates could weigh on investment and consumer spending. A lower inflation rate and greater currency stability will be crucial in fostering a more conducive environment for economic growth, particularly in sectors outside mining. The government must continue to balance monetary tightening with efforts to encourage private sector growth.

  1. Debt Restructuring and External Financing

One of Zambia’s biggest economic challenges in recent years has been its debt burden. By 2024, Zambia was still grappling with a high level of external debt,and more debt being accrued. In early 2024, the country made significant strides in renegotiating its debt with both bilateral creditors and private sector lenders under the G20 Common Framework for debt treatments.

While the debt restructuring process was slow, Zambia managed to secure better terms, including some relief on principal payments and an extension of repayment periods. This provided the government with breathing room, allowing it to redirect funds toward critical sectors like infrastructure, education, and healthcare.

What it means for Zambia’s future: Debt relief offers an opportunity for the government to focus on boosting domestic investments and financing projects that can stimulate economic growth. However, Zambia must remain vigilant about future borrowing and ensure it does not fall back into a cycle of unsustainable debt. The country also needs to strengthen its fiscal discipline and improve the management of public finances to ensure that it can avoid further debt crises in the future.

  1. Copper Sector Performance and Global Demand

Zambia remains one of the world’s top copper producers, and this year has been no different. Copper prices in global markets have remained relatively strong, with demand driven by the shift toward electric vehicles (EVs) and renewable energy technologies. This demand has been a major boon for Zambia’s economy, as copper exports are the largest contributor to foreign exchange earnings. Though, the challenge is that copper is a diminishing commodity.

Further, in 2024, Zambia’s copper production is said to have increased. The government has also announced plans to increase this output further in the coming years by attracting more investment into the sector and improving operational efficiency at existing mines.

However, challenges remain in the sector, including energy shortages and infrastructural issues, which continue to hamper the industry’s growth potential. Additionally, environmental concerns around mining practices have led to increased scrutiny from international organizations and civil society groups.

What it means for Zambia’s future: Zambia’s reliance on copper exports is both an opportunity and a risk.
We are also, as a people discovering that Zambia is sitting on massive gold deposits dotted across the country.
Last few years has brought to our attention other flamboyant minerals such as sujilte stones.
While the global demand for copper remains strong, the country must focus on increasing the value of its exports by diversifying into value-added products such as copper, other processed materials and the gold, dig and other stones.
Lithium is another valued commodity to venture in as a country-looking at alternative power demands we are currently facing.
It is also crucial to address environmental sustainability issues within the mining sector to ensure that future generations can continue to benefit from Zambia’s mineral wealth.

  1. Energy Sector Developments

Zambia’s energy sector remains at a dangerous standstill, threatening to take the economy 15 years backwards.
The expansion of renewable energy projects. The country continues to rely heavily on hydroelectric power, but power generation has been inconsistent due to droughts affecting water levels in major dams, as well as potential mismanagement of the sector. There should be more efforts to diversify Zambia’s energy mix, with more investments in solar, wind, and thermal power.

The government is encouraged to sought to address the perennial energy shortages that have hampered industrial growth and contributed to high operating costs for businesses. By now, we needed to have several renewable energy projects either under construction or in the pipeline, which could significantly reduce Zambia’s vulnerability to power shortages in the future.

What it means for Zambia’s future: Energy diversification is crucial for Zambia’s long-term development. Greater investment in renewable energy will not only stabilize power supply but also help Zambia meet its climate change commitments. It will also open up new avenues for industrialization and job creation, especially in rural areas where renewable energy resources are abundant.

  1. Agricultural Performance and Food Security

Zambia’s agricultural sector has faced a lot of misfortunes. The unfavorable weather conditions mainly due to drought in the last season have led to a negative harvest of key crops like maize, which is vital for both food security and export earnings. The government’s support to smallholder farmers with subsidies and access to inputs is critical in this regard.

Challenges remain in terms of value chain development, storage infrastructure, and post-harvest losses. Despite these challenges, the agriculture sector remains a key pillar of Zambia’s economy, employing a large portion of the population.

What it means for Zambia’s future: Agriculture holds significant potential for diversifying Zambia’s economy and addressing food security concerns. However, unlocking this potential requires investments in infrastructure, value addition, and better access to markets. If managed well, the sector could help lift millions out of poverty and create a more resilient economy.

Conclusion: A Mixed but Promising Outlook

In 2024, Zambia’s economy has experienced major setbacks, with key sectors agriculture, and energy at the center. The country also needs to address its debt issues, ensuring economic diversification, and continued to investment in infrastructure and human capital to achieve sustainable growth.

The outlook for Zambia is cautiously optimistic. If the government can enhance fiscal discipline, attract more meaningful and impactful foreign investment, heavily invest and encourage the manufacturing industry for export growth, the country could see a brighter future, with more job opportunities, improved living standards, and greater resilience to both global economic shocks. The coming years will be critical in shaping Zambia’s path toward a more sustainable and inclusive economy.

bernadettedekazulu@gmail.com


Oh, and Merry Christmas from my family to you and yours🎄

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