2019 Index of Economic Freedom

Zambia

overall score53.6
world rank138
Rule of Law

Property Rights45.0

Government Integrity32.3

Judicial Effectiveness35.6

Government Size

Government Spending80.1

Tax Burden72.3

Fiscal Health12.3

Regulatory Efficiency

Business Freedom71.1

Labor Freedom46.0

Monetary Freedom70.3

Open Markets

Trade Freedom72.6

Investment Freedom55.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 17.2 million
  • GDP (PPP):
    • $68.9 billion
    • 3.6% growth
    • 4.0% 5-year compound annual growth
    • $3,996 per capita
  • Unemployment:
    • 7.8%
  • Inflation (CPI):
    • 6.6%
  • FDI Inflow:
    • $1.1 billion

Zambia’s economic freedom score is 53.6, making its economy the 138th freest in the 2019 Index. Its overall score has decreased by 0.7 point, with declines in scores for trade freedom, judicial effectiveness, and government integrity exceeding improvements in monetary freedom and labor freedom. Zambia is ranked 27th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

Policymaking has been unstable and erratic in the aftermath of suspensions of donor aid in 2018 after the embezzlement of millions in social welfare grants. The government aims to stimulate value-added industrialization and promote economic diversification, primarily by leveraging private-sector involvement and FDI to improve 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 United Kingdom since 1964, Zambia has traditionally been one of southern Africa’s most politically stable countries. Edgar Lungu of the Patriotic Front narrowly won a 2015 presidential special election after his predecessor’s death in office and was elected to a full five-year term in 2016. The arrest of opposition leader Hakainde Hichilema on charges of treason in 2017 is part of a trend of shrinking democracy under Lungu. Hydroelectric power output is recovering after several years of falling water levels caused by drought. 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 45.0 Create a Graph using this measurement

Government Integrity 32.3 Create a Graph using this measurement

Judicial Effectiveness 35.6 Create a Graph using this measurement

Protection of property rights and enforcement of contracts are weak. The Ministry of Lands is overly centralized and hobbled by poor record-keeping. The inefficient judicial system is inadequately resourced and politically influenced. Checks and balances on the president are inadequate. Although anticorruption policies are nominally in place, 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 value-added and property transfer taxes. The overall tax burden equals 17.9 percent of total domestic income. Over the past three years, government spending has amounted to 25.8 percent of the country’s output (GDP), and budget deficits have averaged 7.5 percent of GDP. Public debt is equivalent to 62.2 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. Unskilled labor is abundant, but an efficient labor market has not developed. Subsidy cuts because of revenue shortfalls have reduced inflation and led to lower interest rates that have spurred economic growth.

Open MarketsView Methodology

The combined value of exports and imports is equal to 71.6 percent of GDP. The average applied tariff rate is 6.2 percent. Relatively high tariffs and nontariff barriers to trade have held back integration into the global marketplace and reduce the profitability of investment. About 48 percent of adult Zambians have access to an account with a formal banking institution.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius73-2.1
2Rwanda71.12.0
3Botswana69.5-0.4
4Cabo Verde63.13.1
5Côte d'Ivoire 62.40.4
6Seychelles61.4-0.2
7Tanzania60.20.3
8Uganda59.7-2.3
9Burkina Faso59.4-0.6
10Namibia58.70.2
11South Africa58.3-4.7
12Mali58.10.5
13Ghana57.51.5
14Nigeria57.3-1.2
15Madagascar56.6-0.2
16Senegal56.30.6
17Gabon56.3-1.7
18Mauritania55.71.7
19Guinea55.73.5
20Comoros55.4-0.8
21Benin55.3-1.4
22Kenya55.10.4
23Eswatini54.7-1.2
24São Tomé and Príncipe 540.4
25Guinea-Bissau54-2.9
26Ethiopia53.60.8
27Zambia53.6-0.7
28Lesotho53.1-0.8
29Cameroon52.40.5
30The Gambia52.40.1
31Niger51.62.1
32Malawi51.4-0.6
33Angola50.62.0
34Democratic Republic of Congo50.3-1.8
35Togo50.32.5
36Chad49.90.6
37Liberia49.7-1.2
38Central African Republic49.1-0.1
39Burundi48.9-2.0
40Mozambique 48.62.3
41Sudan47.7-1.7
42Sierra Leone47.5-4.3
43Djibouti47.12.0
44Equatorial Guinea41-1.0
45Zimbabwe40.4-3.6
46Republic of Congo 39.70.8
47Eritrea38.9-2.8
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