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PricewaterhouseCoopers (PwC) has highlighted the critical role of government intervention in stabilising the Zambian economy, managing national debt, and fostering sustainable growth as key strategies to ease persistent pressure on the local currency.
According to PwC Country Senior Partner, Andrew Chibuye, the kwacha is expected to remain under strain throughout 2025, with little likelihood of a significant rebound.
Instead, the currency was forecast to depreciate further—though at a more gradual pace compared to the sharp declines recorded in 2024.
Chibuye shared these insights in the PwC 2024 Economic Review and 2025 Outlook report, released recently.
“The government’s efforts to stabilise the economy, manage debt, and promote sustainable growth will be essential in navigating these challenges and achieving a more stable exchange rate environment,” he said.
Among the key factors driving the kwacha’s depreciation are increased energy imports.
Zambia’s ongoing electricity deficit has necessitated continued power imports, most of which are settled in US dollars—placing further demand on the greenback.
Read more: Implementation of sustained strategies can boost Zambia’s economy — Chibuye
Chibuye also cited rising food imports as a significant contributing factor.
“To mitigate the effects of the drought, Zambia has turned to relief food imports. These purchases are generally transacted in foreign currency, thereby intensifying pressure on the kwacha,” he explained.
Additionally, Zambia’s return to debt servicing in 2024—after defaulting in November 2020—has added new demand for foreign currency to meet external obligations.
An anticipated economic rebound could also intensify demand for foreign exchange, particularly as imports of capital goods and raw materials for industrial use pick up.
Chibuye warned that repatriation of earnings by foreign investors holding maturing government securities could further increase demand for US dollars.
Despite these pressures, some supply-side factors may offer partial relief.
Increased copper production and exports are expected to bolster foreign exchange inflows, while ongoing investment—particularly in the mining and energy sectors—could improve the availability of US dollars.
However, Chibuye cautioned that not all investment inflows would be immediate or liquid.
“Some investments may come in the form of capital assets delivered from abroad, rather than direct cash injections,” he noted.
The outlook underscored the importance of comprehensive economic management to cushion the kwacha and support long-term financial stability.
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