Severe drought spells economic woes for Zambia

Significance

The prolonged dry period is having a serious economic impact, as Zambia relies heavily on hydropower to generate electricity and has been forced to implement power cuts for consumers and rationing for industry. Food production, too, has been badly hit, with crops destroyed and around 6 million people facing food shortages.

Impacts

• Assistance from the IMF and other international institutions will mitigate the worst economic and humanitarian shocks.
• Power rationing in the mining sector will prevent the country from benefiting fully from near-record high copper prices.
• Prolonged power cuts will drag down the service sector as power imports will be prioritised for strategic sectors such as mining.