From Crisis to Change: Zambia’s Road to Sustainable and Inclusive Development

Zambia faces deepening poverty and inequality, with rural stagnation and rising urban poverty driven by weak economic growth, poor policies, and climate shocks. Urgent reforms in agriculture, infrastructure, job creation, and social protection are needed to drive inclusive and sustainable development.

The Zambia Poverty and Equity Assessment: Turning Things Around After a Lost Decade, prepared by the World Bank's Poverty and Equity Practice in collaboration with the Zambia Statistics Agency, UNZA, ZIPAR, IAPRI, and IDS, highlights Zambia's economic and social struggles. The country ranks among the poorest and most unequal nations globally, with 64.3% of its population (12.6 million people) living on less than US$2.15 per day in 2022. The Gini index of 51.5 places Zambia among the world's most unequal economies, revealing that wealth has not trickled down to the poorest. With 77% of the poor classified as extremely poor, up from 71% in 2010, poverty is becoming increasingly entrenched and difficult to escape. A staggering 70% of Zambian children suffer from multiple deprivations in health, education, water, and sanitation, with child stunting rates significantly higher than in most Sub-Saharan and Lower Middle-Income countries.

Weak Economic Growth and Structural Challenges

For nearly two decades, Zambia has struggled to translate economic growth into poverty reduction. Between 2006 and 2015, GDP per capita grew at an annualized rate of 3.2%, but the poverty rate declined by only 0.47 percentage points per year, far below regional and global standards. Economic gains have failed to reach the rural population or create sustainable urban prosperity. Since 2015, urban poverty has surged, growing by 8.5 percentage points, while rural poverty has remained above 75% for over 15 years. Zambia's overreliance on maize farming, poor agricultural policies, and limited infrastructure investment has trapped rural communities in a cycle of low productivity and extreme vulnerability. Meanwhile, urban poverty has spiked due to declining labor market opportunities, especially for low-skilled workers outside Lusaka. The 2015 economic downturn, COVID-19 pandemic, and Zambia's 2020 external debt default have further undermined economic stability, making recovery even more challenging.

The Growing Rural-Urban Divide

The rural-urban divide in Zambia remains severe, with rural areas suffering from poor infrastructure, low market access, and a lack of services. Only 5.7% of rural households have electricity, compared to 74% of urban households, leaving millions in energy poverty. Most rural households remain trapped in subsistence farming, which yields lower incomes than wage or non-farm businesses. However, not all rural areas are the same. Some regions, particularly those near urban centers like Lusaka and the Copperbelt, have seen moderate poverty reduction due to better connectivity, diversified agriculture, and financial access. In contrast, remote areas such as the far north (Northern, Luapula, and Muchinga provinces) have experienced rising poverty, as more households abandon low-productivity agriculture for unstable self-employment in non-farm activities. These findings suggest that rural areas with stronger links to urban economies have better poverty reduction prospects.

In urban areas, poverty has grown dramatically due to weak economic growth, low wages, and rising unemployment. However, Lusaka has been more resilient than other urban areas, exhibiting pro-poor growth patterns. Between 2010 and 2015, Lusaka's poverty reduction was driven by job creation for low-skilled workers, while in other urban areas, only high-skilled workers benefited. This difference became even more pronounced during the 2015-2022 downturn, with Lusaka experiencing a smaller rise in poverty compared to other cities. The expansion of electricity access and mobile phone ownership in Lusaka helped cushion the economic impact, while in other cities, poor labor market opportunities and weak public services exacerbated poverty.

Climate Shocks and Economic Volatility

Zambia's economic struggles have been compounded by climate change, with frequent droughts, floods, and erratic rainfall weakening agricultural productivity. The 2024 drought has impacted 30% of the population, creating food shortages and energy crises. Projections suggest that temperatures will continue to rise while annual rainfall declines, placing millions at risk of climate-induced poverty. Zambia's dependence on maize farming, encouraged by ineffective government policies, has left the country highly vulnerable to weather shocks. Without investment in crop diversification, irrigation systems, and climate adaptation measures, the nation will struggle to protect farmers from economic devastation.

A Roadmap for Inclusive Growth and Poverty Reduction

To reverse the current trajectory, Zambia must implement structural reforms that promote inclusive economic growth, increase job opportunities, and improve public services. The report calls for a shift from maize-centric agriculture, investment in rural infrastructure, and expansion of financial services for farmers. Job creation for low-skilled workers in urban areas must be prioritized to address rising unemployment and declining wages. The government must strengthen social protection programs, such as the Social Cash Transfer (SCT) scheme, which now reaches 1.3 million households (34% of the population). However, long-term progress requires fostering private-sector-led growth, reducing barriers to investment, and expanding access to quality education and healthcare.

Economic recovery depends on enhancing urban-rural connectivity, improving business regulations, and creating an investment-friendly environment. Zambia's current urbanization model has not fully benefited the urban poor, as many city dwellers still live in informal settlements with inadequate services. Investing in urban planning, transportation, and energy infrastructure will boost economic productivity. Additionally, policies supporting climate resilience and sustainable agriculture will be critical in ensuring long-term food security.

Without urgent reforms, poverty and inequality will continue to deepen, and Zambia will fail to recover from its lost decade of economic stagnation. By focusing on inclusive economic growth, improved public services, and climate adaptation, Zambia can chart a new course toward sustainable development and poverty reduction.