The World Bank in Zambia

Zambia is a large, landlocked, resource-rich country with sparsely populated land in the center of Southern Africa. It shares its border with eight countries (Angola, Botswana, Democratic Republic of Congo, Malawi, Mozambique, Namibia, Tanzania, and Zimbabwe) that expands its regional market for goods and services.

Zambia is experiencing a large demographic shift and is one of the world’s youngest countries by median age. Its population, much of it urban, is estimated at about 19.6 million (2021) with a rapid growth rate of 2.7% per year, reflecting the relatively high fertility rate. As the large youth population attains reproductive age, the population is anticipated to double in the next 25 years, resulting in additional pressure on the demand for jobs, health care, and other social services.

Macroeconomic Developments and Outlook

Zambia’s economy rebounded in 2021, with real GDP growing at 4.6%, from a contraction of 2.8% in 2020, supported by firmer copper prices, favorable external demand, good rainfall, and post-election market confidence. In 2022, challenges in agriculture, mining, and construction slowed down the pace of post-pandemic recovery. Real GDP grew by 3.7%, year-on-year, in Q1–Q3, driven by services. The current account surplus narrowed to 2.3% of GDP in 2022 as spillovers from the war in Ukraine raised Zambia’s import bill while falling copper prices and output slowed growth in nominal export revenue. Uncertainty about debt restructuring reversed portfolio capital flows, triggering a more than 30% depreciation of the kwacha between September 2022 and March 2023 and placing pressure on official reserves.

Zambia’s recovery is expected to strengthen, with GDP growing by around 4.5% annually over 2023–25. Firmer copper demand from China and commencement of fertilizer production at a newly established domestic plant will broaden the base of GDP growth. Completion of reforms to agricultural policies, business regulations, and the energy sector will boost fiscal sustainability and promote private sector-led growth. However, the Bank of Zambia expects inflation to rise and remain above its target band of 6–8% over the next two years on account of inflationary pressure from sustained exchange rate depreciation, increase in energy costs, and lingering external headwinds.

Zambia ranks among the countries with the highest levels of poverty and inequality globally. The incidence of poverty worsened with the onset of the COVID-19 pandemic, but it is projected to slowly return to pre-pandemic levels by 2025, reflecting the sustained growth in the services and construction sectors that are expected to benefit the urban poor and reverse the recent increase in urban poverty. Progress with rural poverty, however, is more uncertain. While the agriculture sector is projected to grow, rates are just above population growth and the sector is subject to high volatility. Structural barriers to agricultural productivity and limited ability to cushion external shocks among the rural poor mean that additional support may be needed to improve their livelihoods.

More than 61% (2015) of Zambia’s 19.6 million people earn less than the international poverty line of $2.15 per day (compared to 41% across Sub-Saharan Africa) and three-quarters of the poor live in rural areas.

Political Context

Zambia gained its independence in 1964, under the leadership of first President Kenneth Kaunda. The nation is considered a stable country with successful democratic elections held every five years. After many years of a one-party state, Zambia became a multi-party state in 1991.

Zambia’s democracy is evident by the nine Presidential elections and four different political parties that have so far ruled the country. Among them are the United National Independence Party (UNIP 1964-1991), Movement for Multiparty Democracy (MMD 1996-2011), Patriotic Front (PF2011-2021) and currently the United Party for National Development (UPND). Current President Hakainde Hichilema of the UPND was elected in August 2021, after defeating then-incumbent President Edgar Lungu of the Patriotic Front. The next presidential elections in Zambia will be held on August 12, 2026. 

Last Updated: Mar 29, 2023

World Bank support to Zambia commenced in 1955, well before it attained its independence in 1964.

The World Bank Group (WBG) Zambia Country Partnership Framework (CPF) FY19-23 supports the government in achieving its development goals, and is closely aligned with the government’s National Development Plan and Vision 2030. The WBG is preparing a Performance and Learning Review (PLR) to assesses progress in implementing the CPF program and to determine any  necessary changes and course corrections.

The CPF is underpinned by the Systematic Country Diagnostic (SCD), conducted in 2017 to augment the World Bank’s understanding of the mechanisms needed for poverty reduction in Zambia. 

The CPF focus areas: 

• Increase opportunities and jobs for the rural poor 
• Increase public services and social protection to build a healthy and skillful workforce 
• Build resilient institutions. 

The current World Bank portfolio in Zambia is comprised of 17 national projects and 4 regional projects with a total commitment of $2.55 billion which includes trust funds of about $190 million. The portfolio covers the following sectors: agriculture, education, environment, governance, health, macroeconomics, social protection, transport, and water.

International Finance Corporation (IFC)

IFC’s current portfolio stands at $213 million covering agribusiness, energy, retail and tourism property, and the telecoms sectors.

IFC’s approach promotes sustainable private sector development by improving the investment climate, supporting small and medium enterprises (SMEs), and proactively engaging in the development of key sectors such as infrastructure, agribusiness, and financial services. Along the agriculture value chain, IFC is providing support to commercial agribusiness operations which support smallholder farmers along their value chains and contribute to national food security. In infrastructure, the focus has been on energy, including renewable energy through the scaling solar initiative and other planned independent power producer (IPP) projects.

In the financial sector, IFC provides financing facilities to financial institutions providing support to SMEs, especially women-owned SMEs, and advisory support with the aim of improving the credit infrastructure and increasing access to finance for SMEs by promoting the use of movable collateral and establishing credit reporting programs that support credit reference systems.

IFC has a resident representative in the Lusaka Country Office. 

Multilateral Investment Guarantee Agency (MIGA)

MIGA also is providing support for Zambia’s development. MIGA guarantees in Zambia stand at around $139 million, covering projects in agribusiness, manufacturing, financial, and energy sectors. These guarantees are expected to improve agriculture productivity, boost job creation, deepen financial inclusion, and increase access to cleaner energy. The country is expected to benefit from MIGA’s guarantee of approximately EUR 359 million to cover Standard Chartered Bank (and other lenders) for their non-shareholder loan investments in the Eastern and Southern African Trade and Development Bank (TDB).

Regional Trade Facilitation 

Zambia has committed to implementing policy reforms to enhance regional trade. The country is part of the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) bodies that promote regional trade. Overall, Zambia has performed well in all dimensions of the regional integration index, ranking second in COMESA and fourth in the SADC region. 

COVID-19

Zambia’s location in Southern Africa — it is surrounded by eight countries — increases the risk of imported diseases from neighboring countries and beyond. This is because Zambia is a major trucking route for goods, both for import and export, as well as a destination and transit point for labor migrants, asylum seekers, illegal migrants, and victims of human trafficking in the region. 

The Bank provided $25 million to support Zambia’s response to the COVID-19 pandemic. Of this amount, $20 million came from the Crisis Response Window resources, while $5 million was a grant from the Global Financing Facility for Women, Children, and Adolescents (GFF). The funds are channeled through the Zambia COVID-19 Emergency Response and Health Systems Preparedness Project. 

The World Bank provided additional financing for Zambia’s COVID-19 vaccine rollout in the amount of $24 million ($14 million IDA credit co-financed with a $10 million grant from GFF). The financing enabled affordable and equitable access to COVID-19 vaccines and helped ensure effective vaccine deployment, also supporting strengthening of the country’s vaccination system. Further, the grant is supporting strengthening the capacity for maintaining essential health services focusing on reproductive, maternal, neonatal, child, and adolescent health and nutrition services.

Last Updated: Mar 29, 2023

The Zambia Agribusiness and Trade Project (ZATP) is a flagship project that aims to deliver on the Jobs & Economic Transformation agenda. This $40 million (2016-2024) initiative pivots on mainstreaming private sector led growth model whereby Micro, Small and Medium Enterprises (MSMEs) and smallholder farmers of Zambia are rendered competitive through improved access to markets and finance. The Ministry of Commerce, Trade, and Industry is the main implementing entity.

The project provides a combination of grant financing and Business Development Services to facilitate the evolution of productive partnerships between farmers and commercial off-takers/buyers. This promotes sustainable integration of smallholders and agribusiness SMEs into value chains with established end-markets.

The project has so far supported 98,000 beneficiaries directly plus 600,000 members through aggregator models. 180 productive alliance subprojects have received grant financing and are receiving support on a one-to-one basis through coaching, training, and mentorship. As a result of this support, nearly 57% of Producer Organizations have been able to meet their commercialization agreements with commercial buyers and have demonstrated a 48% increase in average gross sales. As of 2022, t $7.09 million of private capital has been mobilized. This is equivalent to 18% of total project funding and is significant in a fiscally constrained context like Zambia’s. The project provided over 2,300 trainings to 271 high-growth agribusiness SMEs, covering food safety, manufacturing, good agricultural practices, financial management, marketing, packaging, and distribution, and resulted in increased sales and creation of employment.

The Girls’ Education and Women’s Empowerment and Livelihoods (GEWEL) Project, ($347 million over the period 2016-2024 [$312 million from IDA and $35 million from trust fund grants from FCDO, SIDA, and Irish Aid) is a "cash plus" intervention whereby productive inclusion and women, and girl's empowerment components are layered over the social safety net. A recent photobook-A Hand-up, Not a Hand-out -showcases GEWEL project beneficiary voices and stories that bring to life the results of the project.

• The project has so far benefited 75,000 women with a package consisting of life and business skills training and a productive grant of $225. Early results from the randomized control trial impact evaluation of Supporting Women Livelihood (SWL) show that the productive grant has significant positive impact on household food security, profits, savings, income, diversification, and happiness.
• Through the Keeping Girls in School (KGS) Component, over 58,000 girls from the poorest households have benefited from scholarships and support to obtain other school basic needs such as uniforms, shoes, and books.

GEWEL also provides direct financing to the Social Cash Transfer (SCT) program which has allowed for more timely and predictable payments to beneficiaries in 2021 and a scale-up to support over 973,000 households, with a plan to support over a million households in 2022 (nearly 30% of the population and 50% of the poor).

The Southern Africa Tuberculosis and Health System Support Project is a regional center for occupational lung diseases established in Zambia’s copper belt to serve the Southern Africa Development Community (SADC) region. The project has supported laboratories’ compliance with regionally harmonized standard operating procedures for surveillance of Multi-Drug Resistant Tuberculosis (MDR-TB) and case notifications, achieving increases from 20% (2016) to 48% (2021). TB case notifications in target geographic areas increased from 27,700 per year to 29,700 per year (2021).

Energy

The World Bank is supporting the Zambian Government on electricity access initiatives and continues to focus heavily on access across Zambia. 

• Between, 2009 and 2015, the Bank financed the connection of approximately 91,000 households — benefiting almost 500,000 people. 
• More recently, through the Electricity Access Project, the Bank is supporting subsidizing the cost of connection to the grid for 22,000 low-income households and about 1,000 Small Enterprises in rural areas. 

·       Other support has gone to last mile connections to over 50,000 rural households and over 6,000 SMEs (over 260,000 beneficiaries), construction or rehabilitation of 550 km of distribution lines to support those last mile connections, and a Geospatial Master Plan has been developed.

Climate Resilience

The Strengthening Climate Resilience Project has provided support in strengthening Zambia’s institutional framework for climate resilience and improving the adaptive capacity of vulnerable communities in the Barotse sub-basin. Specifically, the project has supported: 

• The rehabilitation of 34 secondary and tertiary canals, providing additional land to more than 2,000 households to grow crops such as rice, winter maize, vegetables, sweet potatoes, cassava, sorghum, and millet. 
• Assistance in Mbeta Island of Sioma district where a natural lagoon is helping 66 vulnerable households (57 female-headed) to integrate fish farming, thus diversifying their sources of livelihood, and promoting the use of a hitherto untapped resource.  
• Development, for sustainability, of a National Standard Norms and Procedures Manual for the operation and maintenance of the canals.  

The Transforming Landscapes for Resilience and Development in Zambia (TRALARD) is supporting the government to improve natural resource management in selected districts to support sustainable livelihoods, and in the event of an eligible crisis or emergency, to provide immediate and effective response to the eligible crisis or emergency. TRALARD is supporting several investments aimed at helping vulnerable communities overcome climate change impacts and build their resilience to ensure increased food security, and livelihood and income generating activities. So far, the project has supported a total of 23,986 households with alternative livelihoods investments (the target being 27,839 by 2025), of these 6,881 are female headed.

Last Updated: Mar 29, 2023

The African Development Bank, European Union, United Nations agencies, and the governments of German, the Netherlands, Sweden, and the United States are among the partners of the World Bank.

The World Bank Group’s strategy adheres to the principles agreed with other 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 the government’s development efforts.

Last Updated: Mar 29, 2023