Zambia's economic performance has continued to improve in recent years. The average annual real GDP growth rate of about 5% over the past five years represents a substantial improvement over the negative growth rate prior to 2000. The positive growth has been driven mainly by increased agricultural production, new investments and increased exports from the mining sector, increased performance of the manufacturing sector, particularly agro-processing industries and growth in tourism. The two figures below illustrate the performance of selected macroeconomic indicators over the past few years.

Development Policy

Future prospects for economic growth remain positive if international commodity prices remain favourable. The new fiscal regime for the mining sector, which aims at bringing the sector in line with international benchmarks and ensuring equitable distribution of the mineral wealth between the state and mining companies, is also expected to boost Government revenue for development programmes. The amendment of the Mines and Minerals Act of 1995 allows for the revision of the mineral royalty for base metals from 0.6% to 3.0 percent, among other changes. However, high international oil prices remain a factor that could have an adverse impact on business as the country is a net oil importer. Zambia has also been affected by the global rise in food prices but is examining possibilities of how it could turn this situation to its advantage.

Among economic reforms that have sustained Zambia’s recent positive macroeconomic performance, the African Development Bank supported policy reforms on foreign exchange market liberalisation, trade liberalisation, tariff reforms and privatisation. The policy reforms have proved sustainable. Under the Support for Fiscal Transparency and Accountability Programme which ended in December 2006, the Bank supported policy reforms and institutional capacity building to promote transparency and accountability in fiscal management. The Bank also provided debt relief to the Government under the Highly Indebted Poor Countries (HIPC) programme and the Multilateral Debt Relief Initiative, valued at US$ 452.33 million, which increased resources available for poverty reduction programmes and other social spending.

Bank Group Strategy

The Bank’s medium term Assistance Strategy is guided by the 2007-2010 Joint Assistance Strategy for Zambia (JASZ), signed by 17 development partners in Zambia in April 2007. The JASZ itself is derived from the government’s Fifth National Development Plan (2006-2010) (FNDP) and its Vision 2020, the two policy documents which provide a comprehensive framework within which Partners continue to support the Zambian Government’s development agenda, as it strives to meet the Millennium Development Goal.

The JASZ provides a joint medium-term national planning instrument for development partners, to manage development cooperation with the Government. It is aligned to the FNDP and attempts to strengthen local ownership of the development process and enhance the effectiveness of development assistance by linking the national development targets to internationally agreed development goals.

The Bank endorses Zambia’s Fifth National Development and National Vision 2030 and works to strengthen the local ownership of the country’s development process.