The industrial sector is the mainstay of Zambia's economic structure. The country has experienced rapid growth in the recent years, maintaining the real GDP growth at 6% per year from 2005 to 2008. Privatization of the state owned copper mines during the 1990s saved the government from covering the heavy losses incurred by the industry. This also increased the probability of copper mining returning to profitability and stimulating economic growth.
Since 2004, copper output has steadily improved because of higher metal prices as well as foreign investment. The year 2005 witnessed Zambia qualify for a US$6 billion debt relief under the Highly Indebted Poor Country Initiative. Poverty continues to be one of the significant problems of the country, despite a relatively stronger economy. The worldwide decline in commodity prices and demand led to a sharp drop in GDP growth. However, a rebound in the prices of copper and maize aided Zambia to recover. High dependence on copper production and agricultural output makes the Zambian economy vulnerable to regular fluctuations. The lack of economic diversity serves to intensify this factor.
Zambia Economic Structure: GDP Composition
The 2009 GDP figures of Zambia stood at $18.55 billion, which marks an improvement from the 2008 level of $17.75 billion and the 2007 GDP of $16.74 billion.
The per capita GDP of the last three years were:
$1,500 in 2009
$1,500 in 2008
$1,500 in 2007
Zambia predominantly exhibits signs of a developing economic structure. This is also evident in the sector-wise GDP composition. The service sector employs 9% of the total work force but contributes 49.5% of the GDP. Industries use 6% of the labor force but contribute 31.3% to the annual GDP. However, the biggest drawback is that the agricultural sector employs 85% of the population, while it contributes only 19.2%, so a transition from the primary to tertiary sector is required.
Zambia Economic Structure: Business Environment
Zambia’s economy is fairly open to foreign and private investment. After the 1990s, the government has taken proactive initiatives to create a favorable business climate. According to the World Economic Forum, Zambia ranks 112 out of 133 in the Global Competitiveness Report. The country ranks 99 out of 180 on the Transparency International on Corruption Perceptions Index.