Zambia faces mounting economic challenges

ZAMBIA was facing its toughest economic challenge in a decade as weak commodity prices, electricity shortages and slowing growth in China hit growth in Africa’s secondlargest copper producer, the World Bank said yesterday.

Zambia needed to strengthen its fiscal position to restore confidence in its economy, which was expected to grow less than 4percent next year before expanding 5 to 6 percent in 2017, World Bank senior economist Gregory Smith said. “Tough action is required in 2016 to curb runaway expenditure, double-digit inflation and growing twin deficits,” said Smith, adding that tighter fiscal policy should be a priority.

A further slowdown in to mining companies about increasing tariffs to meet the rising cost of electricity.

“We are talking to the mines because the cost of supplying the power is very high,” Kalumiana said on the sidelines of the World Bank briefing.

Power shortages

In January, Zambia would begin importing an extra 200 megawatts (MW) of electricity from neighbour Mozambique as it soughtto stem power shortages, Kalumiana said. Zambia already imported 148 MW from Mozambique, he said.

Zambia announced a sharp increase in electricity tariffs on December 3, aiming to generate revenue for investment in additional supply, but said mining firms would be exempt.

The average price of electricity was raised to 10.35 US cents per kilowatt hour (KWh) from 6c per KWh. – Reuters