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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
As Zambia's economy was still rebounding from the COVID-19 recession, it faced a severe drought exacerbated by El Ni?o, impacting 9.8 million people across 84 districts. This climatic disaster has slowed real GDP growth to 1.9% year-on-year (y-o-y) in the first half (H1) of 2024 from 4.3% during H1 2023, reflecting contractions in the agriculture and energy sectors, and subdued performance in administrative and support services, despite some gains in mining.? After narrowing and slipping into deficit in 2023, the current account is beginning to show signs of recovery, edging back into surplus in Q2 thanks to increased grants from cooperating partners, remittances, and reduction in imports. Coupled with fiscal prudence and monetary restraint, these factors have helped to slow the pace of exchange rate depreciation and the increase in inflation. Gross official reserves improved to $3.9 billion covering five months of imports at end-June 2024 amid improved net capital inflows and FX deposits.?

Progress on debt restructuring, including a recent exchange of Eurobonds for two new notes approved by official creditors and the IMF, is paving the way for exchange rate stability, which is expected to bolster macroeconomic stability and reduce inflation in the medium term. Despite a growth deceleration in 2024 due to the devastating effects of the drought on agriculture and hydroelectricity generation, the economy is expected to rebound, with growth projected to average 6.3% annually in 2025¨C26. This optimistic outlook assumes increased mining production, effective implementation of reforms, restoration of debt sustainability, and normalization of rainfall patterns. By the?end of June 2024, Zambia had received mining investment pledges exceeding $7 billion for new and expansion projects, which are expected to boost inflows and services related to mining, supporting future exports and FX earnings.?

Zambia is seeking to leverage its several economic opportunities provided by rich natural resources and its pivotal geographic location in southern Africa to improve livelihoods and tackle high poverty and unemployment. Poverty reached 64.3% of the population in 2022, up from 54.4% in 2015, worsened by limited job creation and declining labor earnings. The urban population recorded the highest reversal, with an 8.5 percentage point increase in poverty incidence reaching 31.9% in 2022. The spike is undoubtedly linked to the COVID-19 pandemic and the ensuing debt crisis. However, the growth deceleration that preceded the crises was already manifesting in weakening labor market indicators such as formal employment and earnings. Meanwhile, rural poverty remained widespread and stagnant, surpassing 75% since 2010. Rural/urban disparities in access to essential services remain stark, hindering human capital development and labor productivity.?

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). The 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: Oct 09, 2024

World Bank Country Partnership Strategy for Zambia

ľ¹ÏÓ°Ôº Group new aims to support sustainable economic growth, enhance climate resilience, and improve well-being, aligning with Zambia¡¯s 8th and . Informed by stakeholder consultations, the CPF outlines priorities for recovery and inclusive, resilient growth and job creation and focuses on three areas: creating better jobs, improving human capital, and enhancing climate resilience.  

As of September 2024, the current World Bank portfolio in Zambia is comprised of 18 national projects and 5 regional projects with a total commitment of $3,150,33 billion, including Trust Funds. The portfolio covers the following sectors: Agriculture, Education, Energy, Environment, Finance & Private Sector, Governance, Health, Macroeconomics, Social Protection, Transport, and Water.  

International Finance Corporation (IFC) 
IFC¡¯s investment and advisory portfolio in Zambia currently stands at $150 million and covers agribusiness, energy, manufacturing, retail and tourism property, the financial sector, and the telecom sectors. 

IFC¡¯s approach for Zambia is in line with the Joint WBG strategy, as it 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. In agriculture 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 digital and renewable energy through the Scaling Solar initiative. and other planned IPP projects. 

In the financial sector, IFC provides financing facilities to financial institutions providing support to SMES focusing on women-owned SMEs and advisory support to improve the credit infrastructure and increase 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 stands 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. In addition, 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.? 

ľ¹ÏÓ°Ôº¡¯s Response to COVID-19 in Zambia 
Zambia¡¯s location in Southern Africa¡ªit is surrounded by eight countries¡ªincreases 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.? 

Last Updated: Oct 08, 2024

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 small holders 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-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, The project mobilized $ 7.09 million of private capital. This is equivalent to 18% of total project funding and is significant in a fiscally constrained context like Zambia. 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 resulting in an increase in sales and creating employment.

The??in the amount of the $90 million IDA credit aims to strengthen public health and response systems in Zambia as well as the Southern Africa subregion to improve national and regional health security. The support is part of the regional support to Africa CDC to strengthen continental and regional infectious disease detection and response systems on the African continent. The project was approved on December 10, 2019. 

The? has provided support with a current total of $342.54 million over the period 2016-2024 ($312 million IDA, and $30.54 million in trust fund grants from the United Kingdom Foreign Commonwealth and Development Office (FCDO), Swedish International Development Cooperation Agency (SIDA), Irish Aid, German Development Cooperation through the Kreditanstalt f¨¹r Wiederaufbau (KfW), and Swiss Development Cooperation (SDC). 

GEWEL 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   has been published, showcasing GEWEL project beneficiary voices and stories that bring to life the results of the project.

• Through the Supporting women¡¯s Livelihoods (SWL) Component, the project has so far benefited 139,400 women with a package consisting of life and business skills training, a productive grant of $225. 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.

• The Keeping girls in School (KGS) component has thus far enrolled 148,616 girls in secondary schools across 65 districts, against the end-project target of 80,000. It has also made significant strides in addressing school-related gender-based violence. It also piloted and scaled up the Case Management System to identify KGS girls at risk of dropping out and retain them in schools, as well as bring those that have dropped out back to school.

• The Institutional Strengthening and Systems Building (ISSB) component has continued strengthening the management information systems, grievance redress mechanism, gender-based violence, and digital payments, among others. The operational areas of financial management, procurement, and environmental and social safeguards continue to be strengthened through this component.

• GEWEL also provides direct financing to the Social Cash Transfer (SCT) which has allowed for more timely and predictable payments to beneficiaries and a scale-up to support over 1.31 million SCT households representing 39% of the population and 82% of the extreme poor, one of the best coverages in the region with strong pro-poor aspects.

Energy

ľ¹ÏÓ°Ôº supported the Zambian Government on electricity access initiatives and continues to invest heavily in access across Zambia. 

• Between, 2009 and 2015, the Bank financed the connection of approximately 91,000 households?¡ª benefiting almost 500,000 people. 

• More recently, through the?, the World Bank is also supporting subsidizing the cost of connection to the grid for 22,000 low-income households and about 1,000 Small Enterprises in rural areas. 

• Last mile connections to over 50,000 rural households and over 6,000 SMEs (over 260,000 beneficiaries).

• Ongoing construction or rehabilitation of 550 km of distribution lines to support last mile connections.

• Geospatial Master Plan developed.

Climate Resilience
The Government of Zambia, with World Bank support, is implementing Project in Northern Zambia, covering 16 districts across Luapula, Northern, and Muchinga provinces. TRALARD aims to improve natural resource management, support sustainable livelihoods, and provide immediate responses to crises. The project finances investments to help vulnerable communities overcome climate change impacts, ensuring food security and climate-resilient income activities and infrastructure. Approximately 562,500 people are expected to benefit, with at least 50% being female-headed households. To date, 31,514 households have received alternative livelihood investments (target: 27,836 by 2025), with 55% being female-headed. Sustainable landscape management practices now cover 99,515 hectares (target: 75,000 hectares). TRALARD has also supported 28 Community Forest Management Groups (target: 30), managing 236,782 hectares, and completed all 20 planned embankments and crossing points.

Health
The Bank provided $25 million to support Zambia¡¯s response to the COVID-19 pandemic. Of this amount, $20 million came from?the ?resources, while $5 million was a grant from the Global Financing Facility for Women, Children and Adolescents (GFF). The funds were channeled through the?.? 

• COVID-19 Vaccine Rollout 
  ľ¹ÏÓ°Ôº has successfully contributed to Zambia¡¯s COVID-19 vaccination efforts by providing?additional financing?in the amount of $24 million ($14 million??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 in Zambia, including supporting strengthening the vaccination system in the country.?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: Oct 08, 2024

The African Development Bank, European Union, United Nations agencies, governments of Germany Government, United Kingdom, Sweden, Holland, and United States are among the partners of the World Bank. 

ľ¹ÏÓ°Ôº 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: Oct 09, 2024