2017 Index of Economic Freedom

Zambia

overall score55.8
world rank122
Rule of Law

Property Rights49.6

Government Integrity35.0

Judicial Effectiveness39.8

Government Size

Government Spending81.6

Tax Burden73.1

Fiscal Health21.6

Regulatory Efficiency

Business Freedom66.6

Labor Freedom48.2

Monetary Freedom70.7

Open Markets

Trade Freedom78.3

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 15.5 million
  • GDP (PPP):
    • $62.7 billion
    • 3.6% growth
    • 5.4% 5-year compound annual growth
    • $3,868 per capita
  • Unemployment:
    • 10.7%
  • Inflation (CPI):
    • 10.1%
  • FDI Inflow:
    • $1.7 billion
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Previous reform measures, coupled with relative political stability, have enabled Zambia’s economy to maintain steady expansion averaging more than 5 percent over the past five years. The government’s policy agenda has focused on reducing inflation, bringing down the fiscal deficit, and developing power and transport infrastructure to facilitate diversification of the economy.

However, overall progress in reforming governance, developing a more robust private sector, and diversifying the economy has been sluggish and mixed. Lingering institutional shortcomings, which include inefficient legal and regulatory frameworks, weak protection of property rights, and corruption, continue to undercut prospects for long-term development.

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Background

Zambia, traditionally one of the most politically stable countries in southern Africa, has successfully undergone five peaceful transfers of presidential power since the end of one-party rule in 1991. Edgar Lungu of the Patriotic Front narrowly won a January 2015 presidential special election held to replace Michael Sata, who died in office in October 2014. Zambia is revising its constitution to reduce presidential powers and institute a 50-plus-one vote for presidential elections, among other measures. Plummeting copper prices, reduced Chinese demand for commodities, and intense drought that reduced the country’s hydroelectric power generation made the Zambian kwacha one of the world’s most poorly performing currencies in 2015.

Rule of LawView Methodology

Property Rights 49.6 Create a Graph using this measurement

Government Integrity 35.0 Create a Graph using this measurement

Judicial Effectiveness 39.8 Create a Graph using this measurement

Protection of property rights and enforcement of contracts are weak. The rule of law remains uneven across the country. The inefficient judicial system is poorly resourced and politically influenced. Checks and balances on the president are inadequate. Although some steps were taken in 2015 to improve openness and transparency, widespread corruption, graft, and mismanagement continue to hinder the functioning of the government.

Government SizeView Methodology

The top personal income and corporate tax rates are 35 percent. Other taxes include a value-added tax and a property transfer tax. The overall tax burden equals 15.5 percent of total domestic income. Government spending has amounted to 24.8 percent of total output (GDP) over the past three years, and budget deficits have averaged 6.7 percent of GDP. Public debt is equivalent to 52.9 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory environment does not promote entrepreneurial activity. Requirements for commercial licenses are time-consuming and costly, and enforcement of regulations is inconsistent. With unskilled labor abundant, an efficient labor market has not developed. Inflation has been rising as revenue shortfalls have forced subsidy cuts and price increases for electricity, fuel, and other goods.

Open MarketsView Methodology

Trade is important to Zambia’s economy; the value of exports and imports taken together equals 73 percent of GDP. The average applied tariff rate is 3.4 percent, and additional barriers restrict agricultural trade. Foreign investment is screened by the government. In general, foreign investors may lease but not own land. Financial intermediation is rare, and credit to the private sector remains scarce.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius74.70.0
2Botswana70.1-1.0
3Rwanda67.64.5
4Côte d'Ivoire 633.0
5Namibia62.50.6
6South Africa62.30.4
7Seychelles61.8-0.4
8Swaziland61.11.4
9Uganda60.91.6
10Burkina Faso59.60.5
11Benin59.2-0.1
12Mali58.62.1
13Gabon58.6-0.4
14Tanzania58.60.1
15Madagascar57.4-3.7
16Nigeria57.1-0.4
17Cabo Verde56.9-9.6
18Democratic Republic of Congo56.410.0
19Ghana56.2-6.8
20Guinea-Bissau56.14.3
21Senegal55.9-2.2
22Comoros55.83.4
23Zambia55.8-3.0
24São Tomé and Príncipe 55.4-1.3
25Mauritania54.4-0.4
26Lesotho53.93.3
27Kenya53.5-4.0
28The Gambia53.4-3.7
29Togo53.2-0.4
30Burundi53.2-0.7
31Ethiopia52.71.2
32Sierra Leone52.60.3
33Malawi52.20.4
34Cameroon51.8-2.4
35Central African Republic51.86.6
36Niger50.8-3.5
37Mozambique 49.9-3.3
38Liberia49.1-3.1
39Chad492.7
40Sudan48.8N/A
41Angola48.5-0.4
42Guinea47.6-5.7
43Djibouti46.7-9.3
44Equatorial Guinea451.3
45Zimbabwe445.8
46Eritrea42.2-0.5
47Republic of Congo 40-2.8
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