The Forecast

In mid-January 2023, the Economic Intelligence Unit (EIU) released its GDP growth estimate ¹ and forecast for Zambia running from 2022 to 2027. The forecast for Zambia, although not great considering the level of economic activity required to rapidly reduce poverty countrywide, is optimistic compared to the GDP growth rate for the world and the USA. EIU projects Zambia’s GDP will grow in the years 2023 to 2027 by an average of 4.0% compared to 2.0 % for the rest of the world, and 1.6% for the USA.

This growth forecast is similar to IMF projections in its country report No 22/292² which forecasts an average growth rate for Zambia’s GDP of 4.2% for the years 2023 to 2025.

Multilateral Institution Support

This optimism is warranted given the successfully negotiated US$1.3 billion IMF credit facility. In the IMF’s own words, the credit facility reflects homegrown goals of Zambia’s Eighth National Development Plan and addresses the following challenges for the economy:

1. restoring sustainability through fiscal adjustment and debt restructuring,
2. creating fiscal space for social spending to cushion the burden of adjustment, and
3. strengthening governance and reducing corruption vulnerabilities, including by improving public financial management.

The World Bank³ similarly disbursed a total of US$740 million in 2022 on concessional terms in “support of Zambia’s reforms to restore fiscal and debt sustainability and promote private sector-led growth.” The World Bank in its press release states the program is meant to support:

1. restoring fiscal and long-term debt sustainability,
2. increasing farmer productivity and access to agricultural markets,
3. ensuring sustainable access to energy, and
4. enhancing access to finance and private sector development.

The support from the IMF and the World Bank reflects the goodwill the 18-month-old government in Lusaka has engendered in the west, and among multilateral organizations. At the same time, there are ongoing debt restructuring negotiations that are by some estimates expected to conclude by March 2023. Although the debt is expected to be rescheduled rather than written off, the terms should be favorable to Zambia in the sense of giving greater space to maneuver with respect to growing the economy and servicing the debt.

Prospects for the Mining Industry

But the story of Zambia’s economic growth is invariably incomplete without discussing mining—that has been the truth since independence in 1964, and is still true in 2023. In that sphere, the positive vibes for GDP growth include expected continued strong prices, demand and investment in base metals, copper and nickel in particular, in the coming years. First Quantum Minerals (FQM), the largest private sector employer in Zambia, approved a US$1.25 billion expansion of its Kansanshi copper and gold mine. FQM says once the expansion is complete, copper production from Kansanshi is expected to average approximately 250 thousand tonnes per annum for the remaining life of mine to 2044. This extends the mine life of Kansanshi, and boosts production.

FQM has in addition commenced work to bring online its Enterprise nickel project located 12 kilometers northwest of the Sentinel copper mine with an investment of US$100 million. FQM expects first nickel production of 5,000 to 10,000 tonnes of nickel in 2023 from the nickel-sulfide deposit. At full production, Enterprise is expected to produce 30,000 tonnes of nickel in high-grade concentrate.

And a positive resolution of outstanding ownership issues at Mopani and Konkola Copper Mines could add gloss to the prospects of the mining industry in Zambia, on top of other investments in ventures in renewable energy, electric vehicle battery technology, transport and other sectors that are being mooted with regularity.

Forward Momentum

By the end of 2023, the current government in Lusaka would have used up about half of its 5-year mandate. This should be enough time for some results from its economic policies to start showing. If the results are positive, its likely the GDP growth figures may have to be revised upwards—any obvious positive results will galvanize support for the government among Zambians, and they will double down on their own economic endeavors which can only help the economic grow faster.

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