Zambia’s Minister of Finance and National Planning, Situmbeko Musokotwane, presented the 2025 National Budget to the National Assembly on Friday, 27 September 2024.
“The 2025 budget is premised on economic recovery and promoting growth to improve the livelihoods of our people,” he said.
Despite the worst drought to hit Zambia in over a century, coupled with the lingering effects of sovereign debt default in 2020, there are reasons for cautious optimism.
The Government has restructured USD 3.9 billion of debt left by the previous administration, securing additional help through a USD 388 million loan from the IMF and a potential USD 140 million catastrophe credit line from the World Bank.
The copper mining industry remains a bright spot, with companies like First Quantum Minerals Ltd. overcoming power shortages through imports, leading to a 6.3% growth in copper output in the first half of 2024.
Zambia’s economy has huge potential to grow owing to its abundant natural resources and central location in southern Africa. Gross domestic product is now estimated to expand by 6.6% in 2025, the fastest pace since 2012 and matching an International Monetary Fund forecast.
Following a frank performance review of last year’s budget, acknowledged the increased debt servicing, Dr Musokotwane outlined the Government’s key macroeconomic objectives:
- Attain a GDP growth rate of 6.6%.
- Reduce inflation to the target range of 6-8%.
- Maintain international reserves above 3.0 months of import cover
- Increase revenue to 21.3% of GDP.
- Maintain a deficit target of 3.1% of GDP.
- Limit net domestic borrowing to 1.9% of GDP.
At the outset of his budget, the finance minister explained that “Economic transformation and job creation pillar is key in transforming the livelihoods of the Zambian people, especially with regard to increasing income and reducing inequality.”
The main provisions of the budget are:
Mining: A New Era of Growth
Zambia’s mining sector is getting a fresh boost with both the revival of old mines and the launch of new projects.
Luanshya Mine has been dormant for 23 years and is undergoing dewatering efforts to create around 3,000 jobs. Likewise, the Lubamba and Kalengwa Mines are restarting operations with a USD 300 million and USD 200 million investment, respectively.
In addition to the revival of these mines, a new mine in Mumbwa will create 2,500 new jobs, while Mingomba Mine is set to attract over USD 2 billion in investment.
With mining exploration continuing across the country, the government is optimistic about hitting President Hichilema’s target of producing 3 million metric tonnes of copper annually.
Agriculture: Modernising the Farmer Input Support Program
The government has reaffirmed its commitment to the 2009 Farmer Input Support Program (FISP). Dr Musokotwane set out his plan to improve inefficiencies within the programme. One key change will be the shift to a Farmer Input Voucher system, which aims to enhance transparency and streamline the distribution of farming inputs.
Musokotwane also outlined the government’s aim to increase livestock production to seven million by 2027 and increase the number of households engaged in livestock farming.
Energy Sector: Tackling Power Shortages
Zambia’s energy sector is facing significant challenges, with the country generating 1,205 MW out of a possible 3,811 MW of installed capacity. The finance minister outlined his ‘multi-pronged’ approach to resolve the situation.
To mitigate the deficit, the government is importing power from Mozambique, Namibia, and South Africa. ZESCO and other independent power producers are investing in alternative energy technologies while the government promotes off-grid solutions like solar power and generators.
Additionally, the government is supporting the increase of thermal energy at Maamba Collieries, which will double its generation to 600MW from the current production of 300MW. The government is also promoting a net metering initiative to allow power trading.
