2015 Index of Economic Freedom

Zambia

overall score58.7
world rank100
Rule of Law

Property Rights30.0

Freedom From Corruption38.0

Limited Government

Government Spending78.0

Fiscal Freedom71.9

Regulatory Efficiency

Business Freedom68.2

Labor Freedom46.0

Monetary Freedom73.2

Open Markets

Trade Freedom76.8

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 14.5 million
  • GDP (PPP):
    • $25.5 billion
    • 6.0% growth
    • 6.8% 5-year compound annual growth
    • $1,754 per capita
  • Unemployment:
    • 13.2%
  • Inflation (CPI):
    • 7.0%
  • FDI Inflow:
    • $1.8 billion
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Zambia’s economic freedom score is 58.7, making its economy the 100th freest in the 2015 Index. Its score is down by 1.7 points from last year due to deteriorations in half of the 10 economic freedoms, including trade freedom, business freedom, investment freedom, and the control of government spending, that outweigh improvement in freedom from corruption. Zambia is ranked 12th out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.

Over the past five years, Zambia’s commodity-linked economy has grown, but policymakers have done little to boost overall economic freedom. Bursts of reform have been followed by declines. Led by score decreases in labor freedom and trade freedom, Zambia’s overall economic freedom has declined by 1.0 point since 2011.

A sharp decline in economic freedom over the past year has returned the economy to the “mostly unfree” category. The rule of law is weak, and corruption is pervasive. The trading regime is relatively open, but an inefficient court system undermines Zambia’s attractiveness to investors.

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Background

In 2011, Michael Sata of the Patriotic Front was elected president after 20 years of rule by the Movement for Multiparty Democracy. In April 2012, Zambia released the first draft of a new constitution that included press freedoms, decentralized government, a bill of rights, and a 50 percent-plus-1-vote requirement to win the presidency. The final draft, due to be released in November 2013, was suppressed by the government but leaked in early 2014 by a citizen watchdog group. Parliament still has not voted on it. Zambia has experienced a decade of rapid economic growth driven primarily by mining. It is Africa’s largest copper producer. Recent increases in copper prices have boosted trade revenues and attracted foreign investment, particularly from China. The influx of Chinese workers has caused tensions between Zambians and the Chinese community. High rates of HIV/AIDS and unemployment contribute to high poverty rates.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 38.0 Create a Graph using this measurement

Corruption is perceived as widespread, although the government has taken some steps to fight graft. The rule of law remains uneven across the country. The judicial system suffers from inefficiency, government influence, and a lack of resources. Contract enforcement is weak, and courts are relatively inexperienced in commercial litigation. The government lacks the capacity to enforce intellectual property rights laws effectively.

Limited GovernmentView Methodology

Zambia’s top individual and corporate income tax rates are 35 percent. Other taxes include a value-added tax and a property tax. Total tax revenue is equivalent to 19.1 percent of domestic income, and public expenditures have reached 27.1 percent of domestic output. Public debt is equal to 35 percent of gross domestic product.

Regulatory EfficiencyView Methodology

The regulatory environment is still not conducive to entrepreneurial activity. No minimum capital is required to start a business, but requirements for commercial licenses are time-consuming. Labor codes are not applied consistently, and workers are often hired on a short-term basis. The central bank tightened monetary policy in 2013 to curb inflationary pressure from cuts in fuel and agricultural subsidies.

Open MarketsView Methodology

Zambia’s average tariff rate is 4.1 percent. Agricultural imports may face additional barriers. The government screens new foreign investment, but in general, it treats foreign and domestic investment equally. The financial system is dominated by banking. Zambia has a relatively advanced banking regime, and financial intermediation and credit to the private sector continue to expand.

Country's Score Over Time

Bar Graph of Zambia Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Mauritius76.4-0.1
2Botswana69.8-2.2
3Cabo Verde66.40.3
4Rwanda64.80.1
5Ghana63-1.2
6South Africa62.60.1
7Madagascar61.70.0
8Swaziland59.9-1.3
9Uganda59.7-0.2
10Namibia59.60.2
11Benin58.81.7
12Zambia58.7-1.7
13Burkina Faso58.6-0.3
14Côte d'Ivoire 58.50.8
15Gabon58.30.5
16Senegal57.82.4
17Tanzania57.5-0.3
18Djibouti57.51.6
19The Gambia57.5-2.0
20Seychelles57.51.3
21Mali56.40.9
22Nigeria55.61.3
23Kenya55.6-1.5
24Mozambique 54.8-0.2
25Malawi54.8-0.6
26Niger54.6-0.5
27Burundi53.72.3
28Mauritania53.30.1
29São Tomé and Príncipe 53.34.5
30Togo533.1
31Liberia52.70.3
32Comoros52.10.7
33Guinea52.1-1.4
34Guinea-Bissau520.7
35Cameroon51.9-0.7
36Sierra Leone51.71.2
37Ethiopia51.51.5
38Lesotho49.60.1
39Angola47.90.2
40Chad45.91.4
41Central African Republic45.9-0.8
42Democratic Republic of Congo454.4
43Republic of Congo 42.7-1.0
44Equatorial Guinea40.4-4.0
45Eritrea38.90.4
46Zimbabwe37.62.1
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