Overview

The Patriotic Front (PF) government and the incumbent President Edgar Chagwa Lungu were re-elected in closely contested presidential race on August 11, 2016. The elections were governed by the country’s recently amended constitution, which requires that a presidential candidate wins the election by 50%+1 of the vote. Lungu, who has served as the country’s president since the January 2015 election after the death of President Michael Sala, received 50.3% of the vote. His closest rival, Hakainde Hichilema of the United Party for National Development (UPND), received nearly 48% of the vote.

The new constitution also requires that a vice president is voted for by the electorate, unlike in the past where the vice president was appointed by the president. Inonge Wina, who became the first woman to hold the vice presidency in 2015, continues to hold the post, making her the highest ranking woman in the country’s history.

Zambia’s economy has come under strain in 2015 and 2016 as external headwinds and domestic pressures have intensified. Gross domestic product (GDP) growth slowed to 2.8% in 2015 from 4.9% in 2014. The external headwinds include slower regional and global growth, which have reduced global copper prices. Domestic pressures include a power crisis from mid-2016 to early-2016, impacting all sectors of the economy, repeat fiscal deficits that have weighed on investor confidence, and low and poorly-timed rains reduced agricultural incomes and increased food prices in 2015. The World Bank forecasts that growth will remain at 2.9% in 2016, before improving in 2017 (4%) and 2018 (4.2%) as the power situation improves alongside higher better from both the agriculture and mining sectors.

A Systematic Country Diagnostic (SCD) for Zambia is currently being prepared, which will help improve understanding on how poverty reduction can be expedited and prosperity better shared. It will also inform the World Bank’s Country Partnership Framework (CPF) with government from August 2017 onwards.  The Zambian government is in the process of finalizing the 7th National Development Plan 2017-2021 (NDP), which is expected to provide “practical implementation strategies” for the government’s goals to achieve economic transformation through an “integrated approach” that links key sectors. For example, by leveraging the joint potential of agriculture and tourism, the government can galvanize and stimulate diversification.

The NDP provides an opportunity to prioritize government objectives toward poverty reduction and strengthening the linkages between budgeting and planning. It is part of the cascading system of planning that commenced with the National Vision 2030 prepared in 2005, and breaks down to rolling annual plans.  A Ministry of Planning and National Development has been created to spearhead national development. 

Last Updated: Nov 18, 2016

World Bank Country Partnership Strategy for Zambia

The World Bank’s Country Partnership Strategy (CPS) for Zambia for fiscal 2013-2016 is closely aligned with the Zambian government’s Vision 2030 and Zambia’s National Development Plans. The plans are organized around the theme of broad based wealth and job creation through citizenry participation and technological advancement. Specific development goals are to foster a competitive and outward-oriented economy in order to significantly reduce hunger and poverty and reach middle income status.

The CPS has two areas of special emphasis. First, because of the potential fiscal windfall coming from the boom in copper export prices, the CPS supports improved expenditure management and effective use of revenue in collaboration and monitoring with the government and local stakeholders, to benefit as many households as possible.

Second, because of the significant gaps between urban and rural areas, and the need for increased access to regional markets, the CPS supports a program of investments in infrastructure that will increase economic opportunities for all Zambians through improved connectivity and integration, resulting in increased competitiveness.

Currently, infrastructure (roads, water and electricity), accounts for about 60% of the Bank’s portfolio, and the average life of a project is 3.8 years. The other sectors have continued to decline and their shares are currently as follows: environment (11%), agriculture (10%), finance and private sector development (8%), the public sector (8%), and human development (5%). Grants now account for about 18%of the current total net commitments while credits are at 82%.

The World Bank (WB) is conducting the systematic country diagnosis and will be presenting its Country Partnership Framework (CPF) to the World Bank Board in FY17. The strategy is aligned with the government’s development priorities. In a country that displays both low income and middle income characteristics, the strategy supports three objectives that speak to the dual nature of Zambia’s development challenges and opportunities:

  • Reducing poverty and the vulnerability of the poor
  • Improving competitiveness and infrastructure for growth and employment
  • Improving governance and strengthening economic management  

Last Updated: Nov 18, 2016

Agriculture

Livestock Development and Animal Health Project: Designed to improve the productivity of key livestock systems for both female and male smallholder producers.

Irrigation Development and Support Project: designed to increase yields per hectare, value of products and support commercialization of smallholder agriculture through strong market linkages and better management of water resources. The Bank is also supporting a regional project involving Malawi, Mozambique and Zambia in strengthening regional approaches to agricultural technology generation and dissemination by establishing a regional center of excellence for Zambia in food legumes.

Health, Nutrition, and Population

The Bank is currently supporting the Zambian Government to strengthen health systems and improve service delivery through a number of investment projects, and Advisory Services and Analytics through the following projects:

Transport

The ROADSIP II was implemented with the support of the World Bank and other development partners. A notable contribution of the Bank’s intervention was the rehabilitation of about 105 km of a section of the trunk road between Lusaka and the Zambia/Zimbabwe border town of Chirundu, as well as the construction of Chiawa and Mufuchani bridges.

Energy

Electricity accounts for approximately 14% of the country’s energy supply mix, ranking second to wood fuel. As at March 2016, total World Bank investment commitment to the sector stood at US$165million in two projects: Kafue Town – Muzuma – Victoria Falls Regional Transmission Line Reinforcement Project that aims improving the reliability and capacity for regional power trade in ZESCO’s southern network; and the Lusaka Transmission and Distribution Rehabilitation Project that will increase capacity and improve reliability for the transmission and distribution network in and around Lusaka.

Mining

The World Bank group is contributing to a Chamber of Mines and International Council on Mining and Metals collaborative study on nation-wide benefits to the economy from the mining sector, and facilitating the Zambian Mining Local Content Initiative.

Strengthened Climate Resilience

The Zambia Strengthening Climate Resilience Project objective is to strengthen Zambia's institutional framework for climate resilience and improve the adaptive capacity of vulnerable communities in the Barotse sub-basin. This would help to solidify Zambia’s efforts for creating an institutional foundation for sustainable, mainstreamed climate resilient development planning and investment.

Finance and Markets (F&M) Global Practice

Zambia is one of the WBG’s 25 focus countries for achieving Universal Financial Access. Zambia is committed to enhance financial inclusion and signed the Maya Declaration in November 2011 as well the G20 Peer Learning Program.

Finance and Private Sector

The World Bank Group is providing technical assistance to Zambia through the Zambia Investment Climate Program II. The technical assistance is in three areas;

  • Business regulation: which will result in aggregate private sector cost savings of $4.6 million
  • Market competition which will lead to reduction of market concentration in at least one market as a result of removing barriers to competition in input markets
  •  Trade logistics: Improving access to international markets and reducing business costs by streamlining import/export costs and procedures to achieve.

 

Last Updated: Nov 18, 2016

The World Bank Group’s strategy adheres to the principles agreed with other Cooperating Partners supporting Zambia development efforts as articulated in the Joint Assistance Strategy for Zambia (JASZ) and comprises highly selective targeted interventions that maximize the impact of government’s development efforts.

The World Bank Group

World Bank (WB) support to Zambia commenced in 1955, well before attaining its independence in 1964. As of March 2016, the WB has 14 active projects, including eight national International Development Association-financed projects with a net commitment amount of $577 million, two trust-funded projects ($53m) and four regional projects valued at $225 million. The International Finance Corporation (IFC) is planning to reinstall its Resident Representative in the Lusaka Country Office in the near future.

The IFC has a significant portfolio in Zambia, mostly in agribusiness and financial services as well as manufacturing. The current IFC portfolio in Zambia includes 11 projects, totaling $215.3 million, which is made up of an investment portfolio of $55.9 million and pipeline to the value of $155.8 million. Multilateral Investment Guarantee Agency (MIGA) are also providing support for Zambia’s development.

MIGA has about $101 million in commitments in Zambia and guarantees are helping agriculture, livestock and aquaculture development. A MIGA guarantee for Agrivision Africa (formerly Chayton Africa) is helping a large commercial farm in the Copperbelt Province to achieve efficient agricultural practices and expand capacity of a grain processing facility, thereby providing substantial demonstration effect to other farms.

MIGA has also supported the Silverlands Fund through a multi-country Master Reinsurance Contract with the Overseas Private Investment Corporation in Silverlands Ranching Limited which is helping improve and develop a large cattle farm in Zimba, Southern Province.

Regional Trade Facilitation

Zambia has committed to implementing policy reforms to enhance trade along the North-South Corridor and other corridors. It is important that implementation of trade facilitation and administrative reforms, especially at border crossings, be accelerated in order to achieve goals of the North-South Corridor Conference in Lusaka in April 2009.

Last Updated: Nov 18, 2016


LENDING

Zambia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments