A PESTLE Analysis of Zambia

Zambia is nestled in Southern Africa, sharing its borders with eight countries: Angola, Botswana, the Democratic Republic of Congo, Malawi, Mozambique, Namibia, Tanzania and Zimbabwe. This resource rich, landlocked country is aptly positioned as a land-linked hub for regional trade markets for goods and services. With a population of 19.6 million and a median age of 18 years for males and 19 years for females, it is one of the world's youngest countries.

According to the Finance Ministry, the economy is set to expand by at least 6% in 2026. This is largely helped by its standing as Africa's second-largest copper producer thus reaping the benefits of rising global demand as well as increased agricultural output due to improved rainfall. These macroeconomic indicators have improved the business environment steadily. This article will provide a PESTLE analysis of Zambia's business environment. A PESTLE analysis is a strategic tool used to evaluate the external factors that can impact a country or organization. The acronym stands for Political, Economic, Social, Technological, Legal, and Environmental factors. Each of these elements will be analysed to understand the broader context in which a business operates, identifying potential opportunities and threats. This analysis is aimed at local and foreign investors to precisely assess the risks and opportunities associated with investing in Zambia.

Political

Politically, Zambia achieved independence from Britain in 1964. Since then, there have been three Republics (constitutional eras), starting with multi-party politics until 1972 when the one-party system came into being. This lasted until 1990 when the country reverted to a multi-party democratic system. In the elections that followed in 1991, Fredrick Chiluba's Movement for Multiparty Democracy (MMD) emerged victorious, ousting Kenneth Kaunda's United National Independence Party (UNIP). Since then, Zambia has had six elections following the constitutional cycle of five years, as well as two special elections that occurred due to presidential deaths in office in 2008 and 2015.

In 1996, Fredrick Chiluba was re-elected. The 2001 poll ushered in Levy Mwanawasa, also of the MMD, who successfully won the 2006 elections. Mwanawasa passed away in 2008, triggering a special election that was won by his Vice President Rupiah Banda. In the 2011 Zambian general election, Rupiah was defeated by the Patriotic Front's (PF) Michael Sata. In 2014, Sata died; accordingly, his Vice-President Guy Scott became president in an acting capacity. The 2015 Zambian presidential election saw the PF's Edgar Lungu win the presidency, and he retained it a year later in the 2016 Zambian general election. In the 2021 Zambian general election, the United Party for National Development's (UPND) Hakainde Hichilema defeated Lungu.

This history of successive peaceful transfers of power and strong public support for democracy is great for business. This political stability demonstrates the consistency of effective state apparatus and institutions capable of maintaining peace and fostering direction. This enables businesses to thrive in stable environments where policies remain relatively predictable, nurturing investor confidence and economic progress. Conversely, political instability can deter investment, disrupt supply chains, and create financial uncertainty.

Economic

Zambia has is an open market economy in many aspects including no capital controls, and all sectors open to both local and foreign investors.. Zambia is a member of the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC) to improve trade administration, transport, and communications within the region.

Over the past four years, Zambia has made significant strides in stabilizing its macroeconomic and microeconomic outlooks through the restoration of fiscal credibility and policies geared toward the growth of its business environment. Zambia's National Budget for 2026 was titled "Consolidating Economic and Social Gains Towards a Prosperous, Resilient and Equitable Zambia," highlighting the progress made while also setting the tone for work to come. As things stand, the Zambian economy stands on the precipice of further growth with a stable exchange rate, inflation at 9.8% (and trending downwards), and projected Gross Domestic Product growth of between 5.8% and 6.4% for 2026.

The mining sector is the linchpin of Zambia's economy, contributing significantly to the gross domestic product, tax revenues, and export earnings. Copper production is rising by over 10%, and a gold rush has sparked artisanal and small-scale mining, spawning over 90 cooperative licenses. Additionally, Zambia is ranked as the world's second-largest producer of high-quality emeralds after Colombia. The mining sector presents various avenues of investment and opportunity in a favourable economic context.

In a bold bid to not be labelled a "one-trick pony," the Zambian economy is diversifying to platform and expand other sectors such as agriculture, tourism, and manufacturing. Several investments are being made to raise yields and add value through processing and packaging. Through initiatives such as the Farmer Input Support Programme (FISP), there is a framework to improve the competitiveness of smallholder agriculture and contribute more to the nation's economy.

Home to the Victoria Falls, one of the seven wonders of the natural world and having twenty national parks, Zambia's tourism sector holds vast investment opportunities and potential for sustainable growth and profitability.

The manufacturing sector accounts for nearly 8% of the country's GDP and has been consistently growing, aided by targeted fiscal measures and strategic investments. This growth has accelerated through the development and investment in Multi-Facility Economic Zones (MFEZ) and industrial parks, opening plants in ceramics, steel, food-processing, and pharmaceuticals.

Zambia's energy resources include hydropower, solar coal, biomass, and renewable energy As the economy continues to grow, there is a demand for energy because of rising needs for irrigation and crop processing, expanding copper production and diversification, new manufacturing facilities and economic zones, and growing urbanization and electrification efforts. The Zambian economy is currently undergoing multisectoral transformation and offers a number of exciting investment propositions. It estimated that up to US$30 Billion needs to be invested in the medium term in power generation.

Social

Zambian society is conservative by nature, with strong Christian values. The younger generation holds more progressive views shaped by Western influences in media and education. Under the Constitution, African traditional and customary law practices are only recognized to the extent that they do not conflict with written law. Family values are core to Zambian society and shape consumer spending, habits and priorities. Education is viewed as a crucial "equalizer" for personal development and empowerment to overcome socio-economic challenges. In 2022, Zambia introduced the provision of free education as a pivotal national objective; this innovative positions Zambia to have an educated population.

The working-age population (15 years or older) was estimated at 11,995,355 in 2024. The labour force was estimated at 4,560,760. The population outside the labour force was 7,434,595 in 2024. Of this population, 2,127,249 was the estimated potential labour force. The employed population was estimated at 3,972,883. About a third of the employed population worked in registered firms and institutions (i.e., the formal sector), representing an absolute total of 1,179,529. The employed population in the informal and household sectors was 2,585,812 and 207,543, respectively.

Technological

Technology is associated with significant productivity gains and innovation. Improved access to digital technologies and effective use of data and digital systems is a powerful transformative tool. The Zambian government, through the Ministry of Technology and Science, has undertaken several initiatives to promote ICT for economic growth and social inclusion. This foray into a tech-driven future has seen GSM networks slowly phased out in favour of enhanced LTE infrastructure for faster and more advanced mobile network technology. Furthermore, there is wider usage of optic fibre, improving the quality of the internet in Zambia. Previously, all internet service providers used satellite technologies as the only way to connect to the internet.

Mobile money has significantly improved financial access for both urban and rural populations where traditional banking services are scarce. This convergence of telecommunication and financial services has opened opportunities in commerce and payments.

Various new ICT innovations have been set up by the government to be enablers in service provision within Government to Government (G2G), Government to Business (G2B), Government to Employee (G2E), and Government to Citizens (G2C). The government has developed the ZamPortal as a one-stop shop for access to all public services.

Legal

Zambia's legal framework from a business perspective is governed by a combination of common law (based on British legal principles), statutory law, and customary law (for issues related to personal property and land tenure in rural areas). This legal framework for business operations in Zambia is based on various acts, such as:

a)     The Companies Act No. 10 of 2017 and No. 23 of 2025 – Contains Corporate Governance provisions and regulatory disclosure requirements:

This is the primary statute governing the formation and regulation of companies in Zambia.

b)     The Income Tax Act –  Contains Fiscal Obligations:

This law and subsequent amendments govern taxation and the fiscal responsibilities of businesses.

c)     The Investment, Trade and Business Development Act 2022:

This law provides regulations and commercial practices guidance.

d)     The Employment Code No. 3 of 2019:

Governs matters related to worker rights, contracts, wages, and labour laws.

e)     The Patents Act Chapter 400 of the Laws of Zambia and the Trade Marks Act No. 11 of 2023:

Regulates intellectual property issues such as patents, trademarks, and copyrights.

f)      The Zambia Development Agency (ZDA) Act:

This law serves as the main legal framework for investment, trade, and business development.

g)     Zambian Customary Law, which governs rural and traditional customary laws. While this list is by no means exhaustive, it provides a snapshot of Zambia's robust legal environment for business operations. It is structured and provides opportunities and protection for both local and foreign investment. Worth noting is that depending on the nature of the business, companies may need to apply for specific licences, especially in regulated sectors like manufacturing, mining, health, and finance.

Environmental

Climate change is affecting the planet in a multitude of ways, including rising temperatures, sea level rise, drought, and flooding. The frequency and intensity of these extreme weather events is projected to increase in the Southern African region. In Zambia, climate change could negatively impact economic growth, agricultural production, and energy supply. Zambia's agriculture sector is largely dependent on rain-fed irrigation, thus exposing it to climate shocks. In addition, climatic changes have led to significant electricity shortages, as Zambia's electricity system is dominated by hydropower.

To avert the impacts of climate change, the government has implemented various solar and green energy initiatives and engaged with the private sector to bridge the deficit. It is not all doom and gloom; investments in clean energy are being sought not only to improve energy security and greater environmental and public health, but research confirms additional near-term benefits: cleaner technology and associated investment opportunities create the fastest job growth. The education system has integrated environmental and social considerations into various disciplines. An example of such a consideration was the design and implementation of a bachelor's degree in Environmental Education at the University of Zambia, with the aim of providing environmental knowledge, skills, and values to personnel serving or intending to join institutions which deal with the environment, to promote green skills in these institutions and among communities. A key piece of legislation that governs sustainability and environmental protection is The Environmental Management Act No. 12 of 2011, and the Zambia Environmental Management Agency (ZEMA) is tasked with administering this Act.

All in all, this PESTLE analysis reveals that Zambia presents a compelling and dynamic landscape for both local and foreign investors. The nation's greatest asset lies in its political maturity, demonstrated by a consistent history of peaceful democratic transitions that underpin a stable and predictable business environment. This political stability provides the bedrock for the ambitious economic strategies currently underway.

Economically, Zambia stands at a promising juncture. With rising projected GDP growth, a stabilised macroeconomic framework, and a government commitment to diversification, the country is actively working to broaden its investment appeal beyond its traditional mining stronghold. Strategic initiatives in agriculture, manufacturing, and tourism, supported by incentives like Multi-Facility Economic Zones, signal a clear intent to build a resilient and multi-sectoral economy.

The social landscape, characterised by a young and growing population, presents a dual-edged opportunity. While the large informal sector and high youth unemployment pose challenges, the government's commitment to free education is a pivotal long-term investment in human capital. This burgeoning, educated population, combined with a society that values enterprise, offers a growing consumer market and a potential labour force advantage for businesses.

This young population is also digitally native, aligning perfectly with Zambia's technological advancements. The rapid expansion of digital infrastructure, the proliferation of mobile money, and the government's push for e-governance are creating an efficient, connected, and increasingly transparent business ecosystem. These technological gains are not only improving productivity but are also fostering greater financial inclusion and opening new avenues for innovation.

Legally, Zambia offers a robust and transparent framework rooted in common law, providing clarity and protection for investors. The presence of dedicated bodies like the Zambia Development Agency (ZDA) to facilitate investment further streamlines the process of doing business. While customary law adds a layer of complexity in specific sectors like land, the overall statutory framework is designed to safeguard investments and foster fair competition.

Finally, while the environmental reality of climate change poses a significant threat, particularly to the hydro-dependent energy sector and rain-fed agriculture it has also catalysed a proactive response. The government's pivot towards solar and other renewable energy sources, coupled with educational initiatives promoting "green skills," demonstrates a forward-thinking approach. These very challenges are transforming into opportunities for investment in sustainable technologies and resilient infrastructure.

Ultimately, Zambia offers a narrative of opportunity tempered by realism. It is a nation that has secured the political stability necessary for growth, drafted a clear economic roadmap, and is actively nurturing its most valuable asset; its people. For the discerning investor willing to navigate its specific challenges, Zambia is not merely a resource-rich land-linked hub; it is a land of opportunity poised for transformative growth. 

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By Itati G. Dzekedzeke

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