Zambia Economic Brief, December 2015 : Powering the Zambian Economy
Zambia faces its toughest economic challenges in at least a decade. The economy has come under strain in 2015 as external headwinds and domestic pressures have intensified. The main domestic risks are threefold. Firstly, that the power crisis will...
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| Format: | Report |
| Language: | English en_US |
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World Bank, Lusaka
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2015/12/25657398/powering-zambian-economy http://hdl.handle.net/10986/23578 |
| Summary: | Zambia faces its toughest economic
challenges in at least a decade. The economy has come under
strain in 2015 as external headwinds and domestic pressures
have intensified. The main domestic risks are threefold.
Firstly, that the power crisis will worsen. Secondly, a
deterioration of confidence in the economy, leading to
further weakening of the currency and increased levels of
inflation. Lastly, a bad harvest that serves to increase
food prices and reduce rural and agricultural incomes, with
the greatest impact falling on the poorest households.
Commodity-exporting countries’ policy makers face increasing
challenges across the globe. Zambia is no exception and must
grapple with multiple challenges as the economy slows down.
Strengthening the fiscal position and restoring fiscal
buffers are necessary to increase confidence in the economy,
reduce the need for costly borrowing, and build resilience
against further exogenous shocks. Economic progress since
2000, driven by mining production and services, has
substantially increased the demand for electricity in
Zambia. Key to note is that an increase in tariffs to
cost-reflective levels is necessary but not sufficient to
increase private investment in electricity generation in
Zambia. The new generation capacity and emergency measures
for 2016 will help in mitigating the impact of the power
crisis in the coming year, but global experience shows there
is no substitute for effective planning. Particular efforts
are needed to improve sector planning and the procurement
processes for large power projects. |
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