Index trend
Previous quarterly editions
Expropriation Risk: 57 54 55 54 ► Political Violence Risk:39 38 39 37 ▼Terrorism Risk:12 12 12 12 ►Exchange Transfer and Trade Sanction Risk: 63 63 63 64 ►Sovereign Default Risk:83 83 83 83 ►
Overall Risk Temperature: 59 (Significant) TREND ►
Special topic: Gray zone aggression
Degree to which the country relies on outbound gray zone action to achieve its strategic objectives1 = Not at all5 = Gray zone action is a core tactic
1
Impact of inbound gray zone attacks on the country1 = Negligible impact5 = Significant impact on economic growth and/or political stability
2
Zambia is not a country that engages in conflictual foreign policy strategies or is currently involved in any prominent international rivalries, whether hot or cold. Relations with neighboring states such as Botswana, the Democratic Republic of the Congo (DRC), Malawi, Mozambique, Namibia and Tanzania have tended to be fairly cordial. Spending on the military is low in both relative and absolute terms at just 1.5% of GDP. This reflects the fact that Zambia does not seek to use its armed forces to broadcast power. Instead, Zambians see themselves as a friendly and peaceful country whose priority is pan-African solidarity rather than regional dominance. Indeed, Zambia has hosted refugees from nearby conflicts in countries such as Angola and the DRC and so has an interest in promoting regional peace and stability.
The one major source of tension in recent years has been with Zimbabwe. Under President Michael Sata (2011 – 2014), Zambia became closer to Zimbabwe, and Sata even named his Patriotic Front (PF) after Zimbabwe’s ruling party, the Zimbabwe African National Union-Patriotic Front (ZANU-PF). Since then, however, relations have grown increasingly complicated. The current president, Hakainde Hichilema, developed strong ties with opposition leaders across the region during the long period in which he was in the opposition. After he won power in 2021, Hichilema broke with tradition by inviting some of these opposition leaders to his inauguration, which caused consternation among some neighboring governments. Relations then began to deteriorate significantly when the election observation mission from the Southern African Development Community (SADC), led by Zambian politician Nevers Mumba, issued a damning verdict on Zimbabwe’s 2023 general elections.
Zimbabwean President Emmerson Mnangagwa and other prominent ZANU-PF figures such as Nick Mangwana subsequently claimed that the SADC report was part of an international plot to overthrow their government and that the Zambian government was doing the work of Western countries such as the U.K. and the U.S. During this period, videos featuring Zambian opposition leaders making critical comments about Hichilema and spreading misinformation about the election and Zambia’s part in it began to appear, apparently produced in Zimbabwe, which exacerbated political tensions within Zambia itself.
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Given his demonstrated commitment to repaying the country’s creditors and adopting liberal economic policies, it is highly unlikely that Hichilema’s government will pose an expropriation risk. The government will come under increasing pressure as it gets closer to the next general elections scheduled for 2026, however, especially if there are no signs of economic recovery.
According to the World Bank, economic growth averaged 5.7% between 2021 and 2023, but the International Monetary Fund (IMF) estimates that the combined challenges of debt and drought mean that economic growth could fall as low as 2.3%, down from initial projections of 4.7%. This would be insufficient to create the jobs that Zambian citizens are hoping for, or to fund the public services that Hichilema promised to provide during the election campaign.
In turn, this will increase the pressure on his government to drive a harder bargain with foreign mining companies — which have already been hit by energy shortages in the country — especially as the PF opposition party intentionally spread malicious rumors that Hichilema had personally gained from the controversial mining privatization process in the 1990s during the last election campaign.
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Zambia has historically suffered low levels of political violence, and the military has never been used to settle political disputes. The prospects for political violence increased under President Edgar Lungu (2015 – 2021), who deployed both the police and party-affiliated gangs to intimidate opposition supporters around the 2023 general elections.
Political tensions fell following the victory of Hichilema and the peaceful transfer of power but have risen thereafter due to three main factors. First, the prosecution of some former ruling party leaders on charges such as corruption and “defaming the president” — and the refusal of Hichilema to allow his predecessor, Lungu, to leave the country to receive health treatment abroad — have led to accusations that the government is manipulating the law for political ends and that the country is entering another phase of democratic backsliding. Second, the involvement of opposition leaders in Zimbabwean-led disinformation campaigns led to allegations that they had engaged in treasonous activity, further straining relations between the government and the opposition. Third, continued economic difficulties have resulted in rising discontent, especially in urban areas.
While high levels of political violence remain unlikely, the combination of economic hardship, disappointed voter expectations and political controversy could lead to growing unrest in the future.
There are no terrorist organizations known to be operating in Zambia. The country has not experienced a major terrorist incident. However, any serious deterioration in the country’s stability would reduce the ability of the security services to monitor any potential external threats.
Inflation continues to be one of the main challenges facing Hichilema’s government. In August 2024, inflation increased for the 14th month in a row to 15.5%. A major reason was increases in food prices, driven by the country’s worst drought for 40 years. Interest rates have been increased in a bid to tame inflation, rising from 12.5% to 13.5% in May of this year (they are widely expected to remain at this level for the rest of the year).
The price of copper — critical to the Zambian economy — has rebounded somewhat and in September stood at $4.17 per pound, not far off the 2021 figure of $4.25 per pound. Many analysts expect that growing demand for copper and tightening supply will mean that prices will continue to increase in future years, which would make it significantly easier for Hichilema’s government to maintain a balanced budget.
In June 2024, Zambia’s international bondholders agreed to their component of a $13.4 billion debt restructuring plan, which took the government much longer than it had hoped to finalize. The deal, which is the first complete overhaul of a debt payment plan under the G20’s new “Common Framework” architecture, will remove around $900 million of debt and spread future payments over a much longer timeline.
This will make debt repayments more manageable, but the central challenge facing the government remains, namely that it does not have sufficient income to meet its spending goals.
Indeed, in the same month as the debt restructuring plan was finally agreed upon, the Zambian government asked the IMF to increase its loan program from $1.3 billion to $1.7 billion due to the ongoing economic downturn and the country’s worst drought in 40 years.
Although the Hichilema government is committed to maintaining fiscal discipline, ongoing budget deficits — and the pressure on the government to increase public spending ahead of the 2026 general elections — suggest that a future debt crisis remains a significant risk.
