2014 Index of Economic Freedom

Zambia

overall score60.4
world rank88
Rule of Law

Property Rights30.0

Freedom From Corruption31.3

Limited Government

Government Spending82.9

Fiscal Freedom71.8

Regulatory Efficiency

Business Freedom74.9

Labor Freedom50.1

Monetary Freedom68.0

Open Markets

Trade Freedom84.6

Investment Freedom60.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 13.9 million
  • GDP (PPP):
    • $24.0 billion
    • 7.3% growth
    • 6.8% 5-year compound annual growth
    • $1,722 per capita
  • Unemployment:
    • 14.0%
  • Inflation (CPI):
    • 6.6%
  • FDI Inflow:
    • $1.1 billion
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Zambia’s economic freedom score is 60.4, making its economy the 88th freest in the 2014 Index. Its score is 1.7 points higher than last year due to notable improvements in five of the 10 economic freedoms including business freedom, investment freedom, and the management of public spending. Zambia is ranked 9th out of 46 countries in the Sub-Saharan Africa region, and its overall score is just above the world average.

Over the 20-year history of the Index, Zambia has advanced its economic freedom score by over 5 points. Improvements in half of the 10 economic freedoms have included double-digit advances in monetary freedom, trade freedom, and business freedom. Achieving its highest economic freedom score since 2001, Zambia has rejoined the ranks of the “moderately free” in the 2014 Index.

However, in some critical areas of economic freedom, particularly property rights, financial freedom, and investment freedom, Zambia has lost ground over the history of the Index. The perceived level of corruption remains high, further undermining the rule of law.

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Background

In 1991, the government of Kenneth Kaunda, in power since independence in 1964, enacted a new constitution instituting multi-party democracy. Michael Sata of the Patriotic Front won the presidency in 2011, the first time a candidate from a party other than the Movement for Multiparty Democracy had been successful. In April 2012, Zambia released a draft for yet another new constitution, which included press freedoms, decentralized government, a bill of rights, and a 50 percent-plus-1-vote requirement to win the presidency. Ratification is still pending. Recent increases in copper prices have boosted trade revenues by 30 percent. In 2012, the country made its first foray into international markets with a $750 million bond issue. High rates of HIV/AIDS, unemployment, and market-distorting agricultural policies contribute to high poverty rates. Agriculture employs 85 percent of the workforce.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 31.3 Create a Graph using this measurement

Corruption is believed to be widespread, although the government has taken some steps to fight graft. The rule of law remains uneven. 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

The top individual income and corporate tax rates are 35 percent. Other taxes include a value-added tax (VAT) and a property tax. Overall tax revenue amounts to 19.3 percent of total domestic income. Public expenditures amount to 24 percent of the domestic economy. Public debt is equivalent to 27 percent of GDP. Expansion of the already robust mining sector is expected to help revenues.

Regulatory EfficiencyView Methodology

The business start-up process has been simplified, taking about a week. However, completing licensing requirements costs almost twice the level of average annual income and takes more than 120 days. A well-functioning labor market is not fully developed. Although politically unpopular, in 2013, the government decided to remove a 5 percent fuel subsidy and discontinue some agricultural subsidies and price supports.

Open MarketsView Methodology

The average tariff rate is 2.7 percent. It is expensive and time-consuming to import goods. Foreign and domestic investors are generally treated equally under the law, but the court system can be slow-moving and unreliable. Zambia has a relatively liberal banking regime, but financial intermediation and credit to the private sector remain low. The banking sector has recorded growth, but high lending rates continue to hinder access to financing.

Country's Score Over Time

Bar Graph of Zambia Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Zambia to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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