Zambia’s economy grew by 4% in 2024, displaying resilience despite experiencing a historic drought and frequent power outages. According to the latest edition of the Zambia Economic Update (ZEU) launched by the World Bank Group (WBG) today, titled: Leveraging Energy Transition Minerals for Economic Transformation, this growth is driven by a strong recovery in the mining sector and expansion in services.
The ZEU highlights that agriculture—the cornerstone of Zambia’s employment and heavily dependent on rainfed farming—faced significant headwinds. However, its minimal contribution to GDP allowed overall growth to continue. Despite economic growth, GDP per capita growth slowed to 1.2% in 2024, and poverty remains pervasive, with 63.1% of the population living below the $2.15 poverty line.
“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,” said Albert Pijuan, World Bank Senior Country Economist for Zambia. “Revenues increased thanks to expanded copper production—although they remain below potential— and investment spending was significantly reduced, allowing for a large primary surplus in 2024.”
The ZEU report highlights that exchange rate depreciation, combined with rising food and energy prices due to the drought, led to sticky double-digit inflation. The Zambian kwacha depreciated against major currencies because of sporadic foreign exchange supply and increased import demand during the drought. Despite monetary policy tightening to restrain inflation, prices continued to drift, and the policy stance remains accommodative as high supply-driven inflation results in negative real rates.
The outlook is optimistic, driven by robust momentum in the mining sector, a rebound in agriculture, and improvements in tourism. Still, significant risks persist due to lower global growth, uncertainties in trade policies, and frequent climatic events. While mining will remain a major driver of economic growth and government revenues, Zambia must diversify its economy to accelerate economic transformation.
The ZEU recommends (i) unleashing agricultural productivity by fully transitioning to the e-voucher system, improving targeting, and shifting toward private-sector-led financing to limit public liabilities; (ii) raising productivity through greater competition in the energy sector; (iii) closing tax gaps by strengthening revenue administration; and (iv) maintaining monetary policy tightening to anchor inflation expectations and protect policy credibility, to achieve positive real rates.
Over a year ago, recognizing the importance of Zambia’s mining sector for its economic growth in the foreseeable future, the WBG, together with the Government of the Republic of Zambia (GRZ), started preparing a practical roadmap: Repositioning Zambia to Leverage Energy Transition Minerals for Economic Transformation. This roadmap is guiding GRZ and its minerals sector stakeholders on realizing GRZ’s vision to maximizing benefits for the country and expanding Zambian participation in the entire ETM value chain, including through value addition.
The roadmap’s analytical work has been supported by the Resilient and Inclusive Supply Chain Enhancement Partnership (RISE) initiative, which supports countries undertaking reforms in their mining sector and along the minerals value chain. Key recommendations of the roadmap have recently been presented by the GRZ to a select group of stakeholders at the WBG Spring Meetings 2025. The roadmap is part of larger WBG diagnostic work looking at the development potential for WBG client countries in its Eastern and Southern Africa region and how those countries can benefit more from the minerals and metals demand boom, driven by the global energy transition.
“Zambia’s economy needs to diversify, but concurrently making the most of Zambia’s green mineral deposits would provide a major boost to the economy and must also be leveraged for economic transformation,” said Achim Fock, World Bank Country Manager for Zambia. “Zambia has the potential to use its energy transition mineral (ETM) endowments—increasingly sought after for the global energy transition—for growth, economic development, and shared prosperity.”
In its focused chapter on ETMs, the ZEU argues that to maximize this potential, Zambia should focus on:
- Scaling ETM production: Implementing comprehensive reforms to boost ETM production, including identifying mineral resources, ensuring a reliable and cost-competitive clean power supply, transport, and logistics services, upskilling the workforce, and strengthening environmental and social risk management.
- Maximizing fiscal potential: Strengthening ETM revenue management and allocation to support fiscal sustainability and broader inter-generational development objectives.
- Adding value to mineral resources: Developing the copper value chain and addressing barriers to greater value-adding activities, including the lack of access to raw materials and finance, enhancing the inefficient investment climate, augmenting the electricity supply, and reducing trade and transport time and costs.
Distributed by APO Group on behalf of The World Bank Group.