Zambia - Country Commercial Guide
Market Challenges
Last published date:

As a landlocked country with various infrastructure challenges impeding the free flow of imports and exports, businesses in Zambia face some of the highest transportation costs in Southern Africa.  Due to the government’s debt crisis, the Bank of Zambia has had to significantly increase yields on its domestic securities issuances to finance its fiscal deficit.  In turn, this has made domestic private sector credit prohibitively expensive for businesses.  (Note:  As of October 27, the yield on a 10-year Bank of Zambia bond was about 27 percent.  End Note.)  

As a result of the government’s debt crisis, as of the end of 2022, it had accrued $2.45 billion million in arrears to domestic suppliers.  The arrears balance does not include the estimated $3.44 billion owed by parastatals, which the government, as the guarantor, could, under certain circumstances, become responsible for.  The unpaid arrears have had a significant negative impact on domestic suppliers of goods and services, including layoffs, deferred investment, and bankruptcies. 

Other key market challenges include policy inconsistency, pervasive corruption, lack of modern manufacturing equipment, and inadequate infrastructure.  Transparency International’s 2022 Corruption Perceptions Index ranked Zambia 116 out of 180 countries, a downgrade of one spot compared to 2021.  The Zambian government’s inconsistent adherence to its own public tendering and contracting regulations has led to credible allegations that some procurement awards were influenced by corruption and malfeasance.  To expedite the flow of goods across borders, the Zambian government has established integrated customs services at several border points:  Chirundu (Zambia-Zimbabwe), Kasumbalesa (DRC-Zambia), Katimamulilo (Zambia-Namibia), Kazungula (Zambia-Botswana), Nakonde (Zambia-Tanzania), Mwami (Zambia-Malawi), and Chanida (Zambia-Mozambique). While the integrated customs services have improved the flow of cross border goods, trucks continue to wait several hours, and, at times, days, to cross borders.  The flow of goods within the region is further impeded by an inconsistent network of primary, secondary, and tertiary roads – many of which degrade further during the rainy season (November to March).