Political and economic situation

Zambia consists of ten provinces and is a presidential representative democratic republic, whereby the President is both head of state and head of government in a multi-party system. The government exercises executive power, while legislative power is vested in both the government and parliament. Zambia has a reputation for relative political stability. After former President Michael Sata’s death in 2014, Edgar Changwa Lungu won the subsequent election to become the sixth President, and was re-elected to a full five-year term in August 2016.

Zambia’s economy is strongly dependent on its most important sector, copper mining, which accounts for 85% of the country’s exports. The country’s agricultural sector has recently increased in importance, growing by over 6% in 2014. China has invested strongly in Zambia in recent years, with about 500 Chinese companies active across the economy.

Zambia’s economy experienced a slight growth stagnation of 6% in 2014 resulting from lower production levels of the mining and manufacturing industries as well as lower performance of the public service sector. Per the African Economic Outlook: “In 2015, the Zambian economy faced economic headwinds initially due to fast rising expenditures and a fiscal deficit that more than doubled in 2013. Slowing demand from China had reduced copper prices to their lowest level in more than seven years. The situation was exacerbated by low agriculture output and a growing electricity crisis. Real economic growth fell to its lowest in 15 years, with gross domestic product (GDP) growth estimated to have slowed to 3.7% from 5.0% in 2014. Maize output declined by 22% due to poor rains. Copper prices declined by 28% while mining output remained roughly the same as in 2014. Slow economic growth is projected for the medium term as the electricity-supply deficit continues and Zambia continues to import electricity from neighboring countries.” According to the US Department of State: “…rampant government spending, widespread borrowing, corruption, and inconsistent economic policies left the economy especially vulnerable to external shocks such as instability in copper prices and poor electricity generation.”