The Central Intelligence Agency of USA (CIA) says Zambia’s economic growth halted in 2015 due to the depreciation of the Kwacha, power shortages, government policy inconsistencies and poor budget execution.
In it’s 2016 overview of Zambia’s economy, the CIA explained that ‘economic policy inconsistency and poor budget execution in recent years has hindered the economy and contributed to weakness in the kwacha, which was Africa’s worst performing currency during 2015’. ‘Zambia’s currency, the kwacha, depreciated sharply against the dollar through 2015, before the central bank restricted lending,’ reported the CIA.
The CIA is the USA intelligence wing tasked to gather and analyses information from other countries.
The CIA further stated that poor management of water resources has also contributed to a power generation shortage, which has hampered industrial productivity and contributed to an increase in year-on-year inflation to 23% by March 2016.
The CIA said,’ ‘Zambia has had one of the world’s fastest growing economies for the past ten years, with real GDP growth averaging roughly 6.7% per annum, but growth slowed in 2015 to just over 3%.’
The CIA said Zambia’s lack of economic diversification and dependency on copper as its sole major export makes it vulnerable to fluctuations in the world commodities market and prices turned downward in 2015 due to declining demand from China; Zambia was overtaken by the Democratic Republic of Congo as Africa’s largest copper producer.
The CIA noted that widespread and extreme rural poverty and high unemployment levels remain significant problems, made worse by a high birth rate, a relatively high HIV/AIDS burden, and by market-distorting agricultural and energy policies.
‘Zambia has raised $7 billion from international investors by issuing separate sovereign bonds in September 2012, April 2014, and July 2015, significantly increasing the country’s public debt as a share of GDP,’ the CIA reported.