Monday, June 17, 2024

Zambia Economic Performance for First Quarter, 2023 – An Objective Analysis



By Mwansa Chalwe Snr

This economic analysis is mainly targeted at ordinary Zambian citizens, who are unable to understand the technical language contained in the other commentaries available on the market. It is an independent analysis, which tries to be as non-technical as possible, and without any political bias. The contents of the analysis is evidence based, not from hear say. This article should be able to debunk the many misleading commentaries about the economy on social media. It is also hoped that it will enlighten citizens about how the economy performed for the period Jan 1 to March 31, 2023.


Zambia’s economic performance has been praised by the International Monetary Fund (IMF) staff team, led by Ms. Allison Holland, Mission Chief for Zambia, who visited Zambia from March 30 to April 6, 2023, using their performance indicators.

“Against an increasingly challenging global economic backdrop, the Zambian economy remains relatively resilient, with robust growth of 4.7 percent in 2022 despite weaknesses in the mining and agriculture sectors. Inflation has remained in single digits since May 2022 but is under increasing pressure with the sustained depreciation of the exchange rate.” the statement stated. “While growth is expected to moderate to 3.6 percent in 2023, assuming a timely agreement with official creditors on an appropriate debt treatment, it is projected to accelerate over the medium term.”

The IMF positive and upbeat assessment of the performance of the Zambian economy is, however, at variance with many commentators, and not shared by ordinary Zambians. The alternative view of the performance of the economy is outlined below.


Zambian inflation accelerated in March to 9.9%, from 9.6% in February,2023 due to the kwacha depreciation slide, largely driven by the country’s delayed debt restructuring talks. The sliding Kwacha has pushed up the prices of imports such as fuel. The increased inflation was reflected in the high cost of living including of the staple food mealie meal as well as the high cost of doing business.

In February, 2023, the cost of living for a family of five in Lusaka as measured by the Jesuit Centre for Theological Reflection (JCTR) Basic Needs and Nutrition Basket (BNNB) was K9, 278.06 compared to K 8,982.82 in December, 2022 which is an increase of K 295.24 or 3.3%.


Zambia’s economic activities continue to be subdued. In the first quarter of 2023, there has been a drop in private sector economic activities, and this is supported by empirical evidence provided from the Stanbic Purchasing Manager Index (PMI) for March, 2023. The index measures private sector purchasing activity, output and employment. Any index below 50 indicates poor performance of private sector activity. The Stanbic Bank Zambia PMI fell to 46.9 in March, 2023 compared to 49.1 in December, 2022.
“The latest reading pointed to a renewed decline in the country’s private sector activity that was the most pronounced since September 2020 .Renewed falls in output and new orders were recorded, amid widespread reports of money shortages, price pressures and lower customer numbers. Subsequently, firms scaled back employment and purchasing activity,” The Stanbic Purchasing Manager Index of March, 2023 report stated.

The reduced economic activities have resulted in the deterioration of unemployment. The country is simply not creating jobs. And instead, it is shedding jobs. It is difficult to find any convincing initiative that one can point to, which is a source of creation of critical mass jobs.


Zambia’s three main components of the financial markets are: the money market, foreign exchange market (Forex) and the capital markets. This analysis is restricted to the money and forex markets.

The government was having difficulties in raising money from the local market through Treasury Bills during the first quarter. The last auction of the Bank of Zambia on 23 March, 2023, performed badly. The Central bank sold K797.7million worth of treasury bills when the target was K1.3billion. The interest rate for the bills ranged from 9.5% for 30 days and 15.75% for one year.

During the quarter under review, Bank of Zambia increased its Monetary Policy Rate to 9.25%.This rate is supposed to be the benchmark to guide Commercial Banks in setting their interest rates. In Zambia, Banks hardly respond to this benchmark, especially when it is going down, by reducing their interest rates. The current Zambia Commercial Banks average lending interest rates is about 25 %, but if you want to save money, they will pay you in the range of 6-10% interest rate.

On basis of experience of operating in three foreign markets – United Kingdom, South Africa and Botswana – the ritual of setting the monetary policy rate in Zambia, does not seem save much purpose to an ordinary Zambians, as the Commercial banks do not significantly respond to it. This is clearly evidence of a market failure in the banking industry in Zambia. There is need for some intervention by government in conjunction with Bank of Zambia without necessarily compromising the free market principles.

Zambia should remember that even the USA, the citadel of capitalism, they introduced the Dodd-Frank Wall Street Reform and Consumer Protection Act, in response to financial industry misbehaviour that led to the financial crisis of 2007–2008. Also, in Brazil, the government enacted Law 10735(2003) which required compulsory allocation of 2% of demand deposits of commercial banks, to provide credit to micro and small enterprises (MSEs) following the failure of banks to provide finance to small businesses. This measure resulted in a boom of MSEs, and created millions of jobs. And so, the public should not buy the old and tired argument that we are a free market, and so we should let market forces reign. Markets have do fail, and at some point need to be regulated.

On the basis of available evidence, therefore, Zambian Banks do not seem to be working in the best interests of the economy, but rather in its foreign shareholders only. They are making money from borrowing risk free money from the government and providing very little credit for the private sector.

The Kwacha performed poorly during the quarter. In March, 2023 it was ranked the worst-performing African currency among those tracked by Bloomberg. On 4th October, 2022, the Kwacha was K15.78 per dollar, but at 30th March, 2023, it was K21.42 which was a loss in value of 36%. These losses have pushed up the price of imports such as fuel, food stuffs and industry raw materials. According to the Bank of Zambia, the losses have been due to limited dollar supply as a result of subdued inflows and heightened demand. Foreign investors in the domestic markets have also been divesting due to the negative sentiment associated with the protracted debt restructuring negotiations, and the uncertainty around the treatment of non-resident holders of government securities.  


There is generally some despondency among a large sections of the Zambian population about the current economic conditions. There is a need to restore hope and confidence in Zambians, which has been eroded by the various unforced errors that created avoidable crisis. There is uncertainty in the air, and many Zambians are unsure about the direction that the country is taking.

The Presidency provides incumbents with a bully pulpit which they could use to inspire hope, change hearts and minds. Many Presidents around the world, use it to regularly communicate with the electorate directly, and formally from time to time. On basis of past experience, especially under the late President Kenneth Kaunda, there is a need for President Hakainde Hichilema to address the nation, where he can make some major pronouncements. There have been too many issues in the last eighteen months that have happened, and one can hardly remember how many times he has addressed the nation to give feedback or show the nation the direction the country is taking.

The speech should be part of the follow up to his promise last year to remove rigidities in the economy, as well as his intention to focus more on the local economy in 2023, by spending more time in Zambia. In the speech, he should announce the short term, practical and convincing low hanging fruit interventions to increase economic activities to kick start economic recovery. He should also include an announcement of a comprehensive, practical and credible road map for Youth job creation in the short, medium and long terms, covering all the three main youth demographics. The other possible theme of the speech, could be our relationship with China. The speech could help in further signalling to the Chinese about our non-alignment policy, and thereby speed up our restructuring deal.


There is no way of sugar coating Zambia’s economic performance in the first quarter of 2023. It was quite poor. The optics of people queuing up for mealie meal due to shortages, so soon after the unexpected recurrence of load shedding, was shocking and mind boggling. Both events occurred after being assured that the Country was self-sufficient in power and the staple food; and was even exporting to neighbouring countries. This should be a wakeup call on several levels, including risk Management and human capital management.

The summary diagnosis of the first quarter performance, is that the both the cost of living and doing business went up, unemployment was increasing, borrowing interests rates were unaffordable and there was shortage of liquidity in the economy. However, in spite of these negatives, it would be disingenuous for anybody to claim that the economic wheels of Zambia have come off. The country’s economic prospects for improvement are still quite high, especially if the debt restructuring is sorted out, and it is accompanied by other common sense interventions to the grow economy, rather than rely on trickle down policies. When one looks at the current trend in economic growth, the economic growth rate in 2022 was 4.7% compared to 4.6% in 2021.The prospects for economic growth are quite good with the expected recovery of the mining, agriculture and construction sector. The Ministry of finance has even revised the 2023 growth rate to 5.4% from the 4% in the budget.

The writer is a Chartered Accountant and Author. He is an independent financial commentator and Analyst. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned, and South China Morning Post (SCMP). Contact: [email protected]


  1. An excellent analysis again,Mr Chalwe.My take home is your observation :”The Presidency provides incumbents with a bullish pulpit which they could use to inspire hope, change hearts and minds…..”I believe the government is well aware of the majority of the issues in your expose.This analysis should indeed be directed to bloggers like Deja Vu and company”who are unable to understand the technical language contained in the other commentaries available on the market”.

  2. In the wake of turbulent global crises and a unsustainable debt left by the previous……..

    Zambia is navigating these trubling times very well…………could be much worse.


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