By Cecilia Chiluba,Zambia,Lusaka
Zambia’s manufacturing sector recorded strong growth in the third quarter of 2025, contributing 9.5 percent to the country’s Gross Domestic Product, despite facing persistent challenges such as load shedding, a depreciating Kwacha and high fuel pump prices.
In his presentation during the Townhall Meeting on the 2021–2025 Budget and Economic Performance, and the 2026 outlook, Zambia Association of Manufacturers (ZAM) President Mohammed Umar said the sector continued to grow despite facing persistent challenges such as load shedding, a depreciating Kwacha and high fuel pump prices.
Mr. Umar attributed the sector’s resilience largely to Statutory Instrument No. 110 (SI-110), describing it as a highly effective policy that helped stabilize supply chains and support industrial output during a difficult period.
SI-110 was enacted under the Customs and Excise Act, and it provides for the suspension of customs duty on specific imported manufacturing raw materials not locally available.
He said manufacturing remains the number one private sector employer in Zambia, noting that the industry is highly labour-intensive with a strong employment multiplier effect.
He disclosed that the sector created about 25,000 direct jobs between 2021 and 2025, reinforcing its critical role in job creation and economic inclusion.
On revenue contribution, he revealed that manufacturing’s tax share increased from 8.6 percent in 2021 to 11.5 percent in 2024, making it the third-largest contributor to the national treasury.
“Manufacturing is a key revenue-mobilization engine, with growth largely driven by improved supply chain stability,” he stated.
In terms of investment, Mr. Umar said the sector actualized US$14.71 billion in investments between 2021 and 2024, the highest contribution across sectors, with US$5.54 billion attributed directly to manufacturing.
He highlighted notable investments in multi-facility economic zones, including the Lusaka South Multi-Facility Economic Zone (LS-MFEZ) and other zones such as the Jiangxi Economic Zone.
Commenting on the post-IMF Extended Credit Facility (ECF) period, Mr. Umar noted a clear fiscal pattern marked by large supplementary budgets—K1.9 billion in 2024 and K33.6 billion in 2025.
He said financing gaps, largely driven by debt servicing and arrears, have mostly been closed through tax measures, with manufacturing repeatedly bearing the burden of fiscal adjustment.
Mr. Umar warned of increased fiscal risks, citing the removal of the IMF anchor in January 2026, the requirement for ministers to vacate office 90 days before elections, and limited time to negotiate a new IMF programme.
“These factors raise the probability of mid-year fiscal stress,” he cautioned.
He recommended no new tax measures on productive sectors, calling instead for multi-year tax predictability through three-year tax road-maps, expenditure rationalization before additional revenue measures, and protection of manufacturing inputs and exporters.
Mr. Umar emphasised that while fiscal consolidation remains important, it must not undermine industrial recovery, warning that over-taxing productive sectors could reverse recent economic gains.
