Zambia’s Economic Recovery Stalled by Power Shortages, Debt, and Slow Diversification
Zambia’s economic recovery remains a distant dream, according to economic commentator Kelvin Chisanga. In his analysis titled “Economic recovery still far fetched amidst challenging uncertainties!”, Mr. Chisanga highlights several factors hindering progress.
The long-held goal of diversifying the Zambian economy away from its dependence on copper mining appears to be stuck in neutral.
Mr. Chisanga emphasizes the urgency of this shift, noting that calls for diversification have been ongoing “since some of us were in secondary schools.”
Production faces a multitude of challenges. Drought-induced power shortages exacerbate the existing structural power deficit, leading to frequent and extended blackouts. These disruptions cripple businesses, inflate labor costs due to inefficiencies, and hinder overall productivity.
Additionally, limitations in the movement of goods within the regional market restrict access to essential imports.
On the expenditure side, economic activity is constrained by high borrowing costs, burdensome debt service charges, and declining purchasing power. This combination weighs heavily on both consumer and business confidence, further dampened by the global economic climate.
Leading indicators suggest a slowdown in economic activity that began in the first quarter of 2017. The impact of monetary easing measures has yet to fully reach the real economy, further complicated by the global pandemic’s effects.
Policy uncertainties in 2019 exacerbated economic hardship, while the external shock of COVID-19 in 2020 pushed many businesses into default and weakened economic structures.
The Zambian government, under the guidance of the International Monetary Fund (IMF), is currently prioritizing fiscal consolidation and policy adjustments.
The hope is that these measures will restore investor and market confidence, address infrastructural gaps, and finally achieve the long-sought diversification away from copper.
However, Mr. Chisanga’s analysis suggests that Zambia faces a long and arduous road to economic recovery.
