Economic situation High levels of public debt
Foreign borrowing going into the billions and excessively expensive public investment projects have been major factors in the state accumulating massive public debt, amounting to over 60 per cent of gross domestic product. Indeed, by autumn 2017, the IMF was already warning that Zambia was at high risk of debt stress. A total of 20 per cent of the budget is being used for loan repayments.
Zambia is rich in mineral resources. It is the world's eighth largest producer of copper and sixth largest producer of cobalt. The mining sector accounts for almost half of all Zambia's exports (2015 figures). Because it is so dependent on exporting copper and cobalt, however, Zambia's economy is very vulnerable to fluctuations in prices on the international commodities market. There is likely to be a considerable increase in demand for cobalt for the construction of electric cars. This could be an opportunity for Zambia.
The agricultural sector in particular offers great potential for development. Up until now, it has accounted for only seven per cent of gross domestic product, despite employing more than half the population. Large numbers of people in Zambia depend on small-scale farming and use no farming machinery. Experts believe that Zambia could produce significantly more food and export to other countries in the region.
Zambia is increasingly using hydropower and solar power as sources of energy. The country is home to about 40 per cent of southern Africa's water resources; 85 per cent of electricity is generated using hydropower. Only 23 per cent of people have access to electricity and in rural regions the rate is as low as 4.4 per cent. One answer to the problem could be off-grid solutions.
Other major growth areas are tourism and construction. However, the risk here is that major infrastructure projects, especially road projects, will have to be financed through loans. This will only serve to increase public debt.