2018 Index of Economic Freedom

Zambia

overall score54.3
world rank132
Rule of Law

Property Rights46.0

Government Integrity36.3

Judicial Effectiveness40.6

Government Size

Government Spending80.2

Tax Burden72.1

Fiscal Health14.4

Regulatory Efficiency

Business Freedom69.8

Labor Freedom43.5

Monetary Freedom65.4

Open Markets

Trade Freedom78.3

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 16.7 million
  • GDP (PPP):
    • $64.9 billion
    • 3.6% growth
    • 4.6% 5-year compound annual growth
    • $3,880 per capita
  • Unemployment:
    • 7.5%
  • Inflation (CPI):
    • 17.9%
  • FDI Inflow:
    • $468.5 million
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Zambia’s economic freedom score is 54.3, making its economy the 132nd freest in the 2018 Index. Its overall score has decreased by 1.5 points, with a small improvement in business freedom outweighed by lower scores for the labor freedom, fiscal health, and monetary freedom indicators. Zambia is ranked 23rd among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

Although Zambia had one of the world’s fastest growing economies until 2014, slower growth has highlighted the need for diversification. To attract investment, the government somewhat unrealistically plans to use public finances to incentivize the private sector to stimulate value-added industrialization by improving power and transport infrastructure. Achievement of this goal will be hampered by lingering institutional shortcomings that include inefficient legal and regulatory frameworks, weak protection of property rights, and corruption, all of which continue to undercut prospects for long-term development.

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Background

Independent from the U.K. since 1964, Zambia is one of southern Africa’s most politically stable countries. Edgar Lungu of the Patriotic Front narrowly won a 2015 presidential special election held after the death in office of Michael Sata and was reelected to a full five-year term in 2016. The arrest of opposition leader Hakainde Hichilema in 2017 on charges of treason reflects what critics say is a trend of shrinking democracy under Lungu. The economy has had several difficult years caused by plummeting copper prices, reduced Chinese demand for commodities, and drought that reduced hydroelectric power output. Zambia is Africa’s second-largest producer of copper, and an uptick in world mineral prices would spur higher output and boost export receipts.

Rule of LawView Methodology

Property Rights 46.0 Create a Graph using this measurement

Government Integrity 36.3 Create a Graph using this measurement

Judicial Effectiveness 40.6 Create a Graph using this measurement

Most agricultural land is administered according to customary law. 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. There has been some improvement of openness and transparency, but widespread corruption, graft, and mismanagement continue to hinder the functioning of government.

Government SizeView Methodology

The top personal income and corporate tax rates are 35 percent. Other taxes include value-added and property transfer taxes. The overall tax burden equals 18.4 percent of total domestic income. Over the past three years, government spending has amounted to 25.7 percent of total output (GDP), and budget deficits have averaged 7.1 percent of GDP. Public debt is equivalent to 53.1 percent of GDP.

Regulatory EfficiencyView Methodology

Red tape and corruption hamper the business environment. Out-of-control government spending, widespread borrowing, and inconsistent economic policies add to uncertainty. There is an abundance of unskilled labor but a shortage of skilled and semiskilled labor. In 2017, the government announced a plan to phase out subsidies for electricity, fuel, and other goods.

Open MarketsView Methodology

Trade is significant for Zambia’s economy; the combined value of exports and imports equals 84 percent of GDP. The average applied tariff rate is 3.4 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average. State-owned enterprises distort the economy. The financial system is dominated by banking. The banking regime is relatively advanced, and financial intermediation and credit to the private sector continue to expand.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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