Country Summary

Macroeconomic performance and outlook

Real GDP growth slowed to an estimated 2% in 2019, down from 4.0% in 2018. Zambia’s economy was hit by drought in the south and west that lowered 2018/19 agricultural production and hydropower electricity generation considerably. Severe electricity rationing fol- lowed, and long periods of electricity load shedding dampened activity in almost all economic sectors. Zambia also faces slower mining, with reduced output and lower copper prices. Economic activity is expected to remain weak, with growth rebounding moderately to 2.4% in 2020 and 2.9% in 2021.

Public investment has severely strained public finances. Overreliance on nonconcessional external borrowing since 2012—to finance large-scale infrastruc- ture projects—has resulted in large fiscal deficits since 2014 (going from 6.5% of GDP in 2013 to 12.1% in 2015, 10.5% in 2018, and 7.7% in 2019). Large domestic payment arrears have also accumulated (9.7% in 2019). The rapidly increasing public debt (80% of GDP at the end of 2019, up from 35% at the end of 2014) places Zambia at a high risk of debt distress.

Inflation rose from 7.5% in 2018 to 9.2% in 2019 and is expected to remain at 9% in 2020–21, pushed by large exchange rate depreciations and food price increases. This prompted monetary policy tightening, with the Bank of Zambia raising the policy rate by 50 basis points to 10.25% in May 2019. The current account deficit is expected to widen to 2.8% of GDP in 2020–21 due to increased public investments and mining sector imports, and higher debt-service pay- ments reduced foreign reserves to 1.6 month of imports at the end of 2019.

Tailwinds and headwinds

Growth is expected to get a boost from the government’s medium-term strategy for inclusive growth, set out in the Seventh National Development Plan (7NDP) for 2017–22. The 7NDP identifies tourism, mining,

energy, and agriculture as sectors that drive growth and create jobs and sites for economic diversification. It identifies infrastructure, access to markets, and information and communication technology as growth enablers.

In agriculture, the 7NDP plans an integrated information system to support agribusinesses, farmer expan- sion, and extension services. It supports climate-smart agriculture to build resilience. It will improve delivery of the Farmer Input Support Program to raise farmer productivity and promote livestock and fishery development to diversify agriculture.

In mining, the 7NDP focuses on mining gemstones and industrial minerals to diversify beyond copper. In energy, it plans to boost capacity and diversify sources —with projects already developed, including solar energy. Infrastructure for transport is planned, with roads already being built. In tourism, the aim is to diversify and make it a job creator by rehabilitating infrastruc- ture to and within tourist sites.

Risks from the drought call for public programs that enhance agricultural resilience and diversify the sources of energy production. Measures outlined in the 2020 budget to build agricultural resilience can mitigate this to some extent, but requires sustained implementation.

To reduce risks associated with debt requires a major and sustained fiscal adjustment—ranking public investment projects, postponing new nonconcessional debt, ceasing to accumulate domestic arrears, strategizing to reduce them, and mobilizing more revenue. The 2020 budget reflects these requirements.

External risks arise from weakening global demand and tightening global financial conditions. Esca- lated US–China trade tensions would lead to a drop in demand for copper and greater volatility in copper prices. These risks reflect longstanding reliance on a narrow economic and export base driven by copper mining. Reducing these risks requires Zambia to fast- track diversification and speedily transition the econ- omy to a broader model led by the private sector.

Health sector preparedness

The 2019 Global Health Security Index ranked Zambia 152 among 195 countries overall, with a score of 28.7. Preventive measures, including a response mechanism, are in place. But if local infections rapidly increase, isolation facilities, intensive care units, and testing laboratories are inadequate to handle the situation. The population at risk, according to WHO estimates, amounts to 6.5 million across 13 high risk districts of the country, including Lusaka, the epicenter.

Policy responses

The government moved swiftly with policies to contain the spread of the virus and support the economy, including strict immigration controls of mechanisms for screening and isolating suspected cases, suspending nonessential foreign travel, closing schools, cinemas, restaurants, and bars, restricting all public gatherings, and closing all air- ports except in Lusaka, the main air travel entry point into the country.

To address the economic impact of the pandemic on the economy, the government waived penalties and inter- est on outstanding tax liabilities, suspending excise duty on some essential products, removing provisions relating to claim of VAT, suspending import duties on the import of concentrates in the mining sector, and suspending cus- toms duties and VAT on additional medical supplies used in the fight against COVID–19. Monetary policy measures include injecting K12.64 billion ($645 million) to alleviate the economic pressures and liquidity constraints on financial institutions, enabling them to restructure, refinance, or extend credit on more favorable terms to businesses and households.

Zambia needs to invest in developing capacity and in improving and expanding the public health infrastructure. It also needs to accelerate economic diversification and pro- mote value addition and local manufacturing to minimize the economic impacts of future shocks.

Source: African Economic Outlook 2020

Fixed Income


The government securities yield curve extended to 15 years with three benchmark points along the curve (3-5 and 10 years). 

The strategy is to issue securities for  domestic financing needs, to roll over debt and boost market development. 

Issuance strategy 

The national debt strategy aims to reach the following domestic debt structure: 40% for T-Bills and 60% for T-Bonds. 

Benchmark issues 

Up to 2014, benchmark bonds (of 3-5 and 10 years) were re-opened while the other bonds were new lines. The single-price auction method is used by Zambia. While constructing the yield curve is a consideration, it is yet seen as the utmost priority. The focus remains on meeting domestic financing needs and developing the market for issuance strategy, etc. The criteria used to choose the benchmark is to track the most popular and most liquid bonds. 

Yield curve 

Yield curve calculation models 

There is no benchmark yield curve in Zambia although the only yield curve is constructed from the primary market yields of government securities. 

Interpolation methods 

There is no secondary yield curve in Zambia, but the primary market yield curve is interpolated using the simple extrapolation method.

Yield curve managed by 

Although there is no formal yield curve in Zambia, the Bank of Zambia (Central Bank) is responsible for calculating the curve from the primary market.

Display platform 

There is no benchmark yields curve in Zambia but the Bank of Zambia website shows all the yields from the primary market. 

Challenges in building an efficient yield curve 

  • Lack of transparency: the challenge in building an efficient yield curve is that there is no institution that publishes secondary market prices/yields at which bonds are traded, hence the difficulty in constructing an efficient yield curve. 

Guide to Buying Bonds

Procedures for market participation

The primary market for Government securities is open to all financial institutions and to the non-bank entities. The minimum amount to invest in non-competitive bids is K1,000 and the minimum amount to invest in a competitive bid is K 30,000. Bidders are allowed to participate to a maximum of one bid per maturity bucket. The administrative steps for transaction settlement are provided on the document about the rules and practices on government securities. 

There are also tender sales to the non-bank entities through authorized dealers.


Interest income on Treasury bonds is taxable at a rate of 15%.

There is no capital gains tax.

Settlement cycle

For Government bonds, settlement is done on Monday, with a settlement cycle of T+3. Similar to treasury bills, settlement of government bonds is through commercial banks’ accounts at the Central Bank. 

Market restrictions

Capital Controls

There are little to no capital controls in Zambia.

Restrictions on foreign exchange and profit repatriation

All foreign exchange controls in Zambia were removed. As a result, there is no exchange control on current or capital account transactions.  Investors are free to repatriate capital investments, interest, profit, dividends, management fees, technical fees, and royalties. However, the recent volatility of the Zambian Kwacha has seen the BoZ adopt a more restrictive foreign exchange stance. In 2012 and 2013, the government instituted two new regulations (Statutory Instruments 32 and 33) aimed at monitoring the flows of foreign currency in the country.

Credit rating

Rating Agency

Current Rating








Standard & Poor’s    



List of Primary Dealers

The list of dealers authorized by BoZ is as follows:

Documents & Resources

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