Energy Deficit Serious Source, Downscaling Zambia’s Growth Patterns
The IMF’s downward revision of Zambia’s growth outlook underscores the seriousness of the current power crisis and its ripple effects across the economy.
Load shedding has moved beyond being an energy issue; it is now a macroeconomic constraint that is eroding productivity, weakening investor confidence and slowing recovery efforts in key sectors.
The indicators cited by the IMF as reduced electricity generation, lower non-mining output, and drought-induced hydropower limitations paint a clear picture of how deeply energy shortages are undermining economic momentum.
Manufacturing and agro-processing, which are key central components to Zambia’s diversification agenda, are particularly exposed, with many firms operating slightly below capacity or facing rising operational costs.
If power challenges persist, further downward revisions are inevitably seen coming to the fore. This risk further highlights the urgent need for structural reforms in the electricity subsector, especially around governance, efficiency and financial sustainability.
Cost-reflective tariffs, while politically sensitive, remain such a critical to unlocking the potentials of private capital investment needed for new generation capacity.
Equally important is accelerating diversification of the energy mix on the nation’s energy balance sheet.
Zambia’s overreliance on hydropower has left the economy vulnerable to climate variability.
Scaling up solar, thermal and regional power imports will be essential to stabilizing supply and protecting the economy from future drought cycles.
The IMF’s message is clear: Zambia’s growth prospects are closely tied to the speed and depth of reforms in the energy sector.
Addressing these structural weaknesses is not only necessary for short-term recovery, it is vital for building a resilient, competitive and sustainable economy.
