Zambia: A strategic loan for strengthened economic governance

The African Development Bank (AfDB) recently approved a $108 million loan to Zambia. This initiative is part of the Fiscal Sustainability and Economic Resilience Support Programme , designed to strengthen economic governance and diversify the pillars of the Zambian economy.

Key objectives of the program

1. Strengthen fiscal sustainability and improve transparency

The programme aims to optimise domestic revenue mobilisation through innovative measures such as:

• Electronic invoicing (“smart invoice”) : a tool to modernize tax collection.
• Extension of the tax base : registration of 12,000 new taxpayers subject to VAT.
• International commitment : membership in the Global Forum on Tax Transparency for effective exchange of information for tax purposes.

Furthermore, the efficiency of public spending will be improved through the implementation of a public investment management strategy, promoting greater transparency and optimal allocation of resources.

2. Stimulate agro-industrial development

A crucial part of the programme focuses on agriculture, highlighting:

• Agricultural mechanization : creation of 10 mechanization centers, offering agricultural equipment for rent to farmers.
• Increased productivity : increased agricultural production and increased supply to local and international markets.
• Sustainable Financial Support : Funding of 257 million kwacha (about $9.4 million) for the 2023-2024 agricultural season. This private sector-administered facility aims to provide agricultural inputs to small and medium-sized farms.

Multi-sector collaboration for a diversified economy

According to Raubil Durowoju, AfDB Country Manager in Zambia, the programme covers several sectors in order to:

• Promote private sector participation through public-private partnerships (PPP) .
• Encourage climate-smart investments , contributing to a sustainable economy.
• Support the development of micro, small and medium-sized enterprises (MSMEs).

A promising active portfolio

The loan is part of the AfDB’s overall portfolio for Zambia, which as of November 30, 2024, comprised 24 active projects totaling $872.3 million . This program reflects the Bank’s continued commitment to supporting Zambia on its journey towards a more resilient and competitive economy.

Conclusion

This loan from the African Development Bank represents a major opportunity for Zambia. By strengthening economic governance, modernizing agriculture and supporting small businesses, the country is positioning itself for sustainable economic growth. This project represents a critical step in Zambia’s economic transformation, while strengthening its resilience to fiscal and climate challenges.