Zambia’s local currency, the kwacha, has surged by 12% in 2025, positioning it as Africa’s second-best performing currency against the US dollar as the country’s economic outlook improves on the back of higher copper output, record crop harvests and easing inflation.
Finance Minister Situmbeko Musokotwane disclosed the development during an interview on the sidelines of Bloomberg’s Africa Business Media Innovators conference in Livingstone on Monday.
He said the economy is projected to expand by at least 6% in 2025 — the fastest pace since 2021 — driven by improved rainfall and increased productivity in Zambia’s critical mining and agricultural sectors.
The anticipated growth marks a notable rebound from the 4% expansion recorded in 2024 and signals recovery from the prolonged economic distress brought on by a historic drought and a multiyear debt restructuring process.
The growth acceleration, according to Musokotwane, enhances Zambia’s fiscal stability and increases the probability of better returns for creditors, including bondholders.
“We just need to maintain this for 10, 15 years — positive growth every year,” Musokotwane said. “I think people will begin to see that it’s not a certainty that you are born in poverty and you will end in poverty. Things can change.”
The kwacha’s appreciation reflects renewed investor confidence in Zambia’s macroeconomic fundamentals, particularly as inflation trends downward.
Lower inflationary pressure has provided some relief to households while supporting broader fiscal reforms initiated by the government in coordination with international lenders.
Despite the bullish outlook from the Zambian government, the International Monetary Fund (IMF) maintains a slightly more conservative forecast of 5.8% GDP growth for 2025.
The Washington-based lender noted in a statement released Monday that debt-servicing costs have risen more than expected, prompting authorities to review the national budget and introduce additional revenue measures.
The IMF, however, acknowledged the progress made in stabilizing the macroeconomic environment, noting that stronger growth could enhance debt sustainability and create a pathway for structural reforms.
Zambia, Africa’s second-largest copper producer, is on track to benefit significantly from rising global demand for the metal. The government has targeted record output for 2025 as copper prices remain elevated due to energy transition efforts and persistent supply constraints globally.
In addition to mining, a strong rebound in agriculture is expected, particularly in the production of maize, Zambia’s staple crop. Favorable weather patterns have led to improved crop yields after last year’s devastating drought depleted reservoirs and disrupted hydroelectric generation.
The kwacha’s rally has been bolstered by foreign exchange inflows from mining exports and external support programs. Analysts say that sustained currency gains and macroeconomic stability could reduce external vulnerabilities and support investor sentiment in the medium term.
Zambia’s recent progress comes after years of economic stagnation, foreign exchange instability, and sovereign debt distress. The country became the first African nation to default during the COVID-19 pandemic in 2020. Following a protracted debt restructuring process, the government is now seeking to rebuild fiscal credibility and restore sustainable economic growth.
As the kwacha continues to gain strength and inflation trends downward, the government remains optimistic that 2025 could mark a turning point in Zambia’s economic trajectory.
Policy consistency, revenue reforms and enhanced productivity across key sectors will remain critical to sustaining the momentum.
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