By Kelvin Chisanga
Zambia enters the election period with stronger economic fundamentals. The challenge is to protect those gains and convert stability into jobs, production and higher household incomes.
As Zambia approaches the 13 August 2026 general election, the country faces a temporary political risk premium: a period in which investors, lenders and businesses become more cautious while awaiting clarity about the political outcome and the direction of economic policy.
Fortunately, Zambia enters this period with a stronger macroeconomic foundation than it has had in recent years. Inflation returned to the Bank of Zambia’s target range in April 2026, gross international reserves rose to about US$6.4 billion—equivalent to 4.4 months of prospective imports—and debt-restructuring agreements now cover approximately 94 per cent of the restructuring perimeter. These achievements represent meaningful progress in restoring economic credibility, as detailed in the IMF’s May 2026 assessment.
However, macroeconomic stability is only meaningful when it translates into tangible improvements in citizens’ lives. The real test is whether lower inflation, stronger reserves and improved investor sentiment can produce affordable food, reliable electricity, accessible finance, productive employment and higher household incomes.
Political competition is necessary in a democracy, but it must not weaken institutions, interrupt essential reforms or undermine economic confidence.
Investors require predictability, while domestic businesses need affordable financing, reliable power, consistent taxation and a stable regulatory environment. Regardless of who wins the election, Zambia should protect the independence and credibility of its economic institutions. Fiscal discipline, responsible borrowing, transparent public procurement and respect for contracts must remain national priorities rather than partisan choices.
From monetary easing to productive investment
The Bank of Zambia’s recent reduction of the monetary policy rate to 13.25 per cent provides an opportunity for financial conditions to begin easing as inflation moderates. However, a reduction in the policy rate will have limited developmental value if commercial lending remains prohibitively expensive or credit continues to be concentrated in consumption, government securities and established corporations.
The next challenge is ensuring that improvements in liquidity and financing conditions support productive sectors. Small and medium-sized enterprises, agriculture, agro-processing, manufacturing, tourism and technology-based businesses should have a realistic opportunity to access capital.
The objective should not simply be more lending, but better-directed lending that expands production, creates jobs and strengthens Zambia’s export capacity. Credit guarantees, movable-collateral systems, improved business records and more effective development-finance institutions could help reduce the risks associated with lending to smaller enterprises.
Editorial note
The recent monetary easing refers to the policy-rate cut to 13.25 per cent, not a reduction in the statutory reserve ratio. This distinction has been corrected for accuracy.
Turning copper into national transformation
Copper remains central to Zambia’s economic prospects, accounting for roughly 70 per cent of export earnings. Yet expanding mineral production alone will not deliver broad-based transformation. Zambia must capture more value through local processing, mineral-based manufacturing, engineering services, supplier development and stronger linkages between mining and the wider domestic economy.
A World Bank assessment of Zambia’s energy-transition minerals similarly identifies unreliable electricity, limited finance, transport costs, skills shortages and weaknesses in the investment environment as major barriers to developing the copper value chain.
Local-content policies should therefore build genuine productive capacity rather than simply impose procurement targets. Zambian suppliers need access to affordable finance, technology, certification and the technical skills required to meet international mining standards. Without that support, local-content rules could create compliance costs without producing competitive domestic industries.
Energy is the binding constraint
Zambia cannot expand copper production, manufacturing, agro-processing or digital services without dependable electricity. The 2024 drought exposed the risks of relying too heavily on hydropower, with households and small businesses bearing much of the cost through prolonged load-shedding.
Energy investment must consequently be treated as a central component of economic policy. Zambia needs to accelerate investment in solar, wind, storage, transmission infrastructure and regional electricity trading while restoring the financial sustainability of the domestic power sector.
The World Bank’s latest Zambia Economic Update argues that a reliable and financially sustainable electricity sector is essential for diversification, private-sector growth and job creation. Regulatory certainty, transparent tariffs and protection for vulnerable households will be crucial to attracting long-term private capital.
Stability must become prosperity
Macroeconomic stability is not the destination. It is the foundation upon which structural transformation must be built.
Zambia’s next economic phase should focus on investment, productivity, industrialisation, job creation and rising household incomes. It should also recognise that citizens judge economic progress through their daily experiences: the cost of food and transport, access to employment, electricity availability and the affordability of credit.
The coming election will therefore test more than Zambia’s democratic institutions. It will test whether the country can maintain policy continuity while responding to legitimate public demands for faster and more inclusive economic progress. A recent Reuters analysis of the issues investors are watching highlights precisely this concern: whether Zambia can convert its post-default macroeconomic recovery into stronger, job-creating growth.
Whatever the political outcome, Zambia must protect economic stability, institutional credibility and investor confidence. Elections should determine who governs, but they should not reverse the foundations required for national development.
If Zambia manages this political transition responsibly, the present risk premium should remain temporary. The greater objective must be to convert restored credibility into productive investment—and productive investment into prosperity that citizens can see and feel.
Article by Kelvin Chisanga. Photo credit: Kelvin Chisanga.
