Introduction

The 2025 national budget, themed “Building Resilience for Inclusive Growth and Improved Livelihoods,” comes at a time when the nation grapples with pressing challenges. A dry 2023/2024 farming season and an energy crisis have contributed to the low economic growth which is now projected to close below 2 percent. Public debt, while its restructuring has reached an enhanced stage, still remains a major obstacle towards realizing fiscal space. These challenges have undoubtedly intensified the need for resilient policies that will spur growth— both short-term and long-term. While the 2025 budget presents ambitious targets and growth aspirations of not less than 6.6 percent, a closer examination reveals structural limitations within key sectors, calling the viability of these goals into question.

Revenue Ambitions vs. Economic Realities

The revenue targets set under the 2025 national budget are the most ambitious ever set. K174.2 billion is to be collected from the domestic economy— about 80.2 percent (K137.4 billion) of which is to be collected from taxes. While the targeted high economic growth rate reasonably aligns with an increased tax revenue collection target, it is unlikely that Zambia’s Gross Domestic Product (GDP) will grow by more than the 2024 target of 4.4 percent. In 2024, the government has also targeted K114.6 billion from taxes of which K77.9 billion was to be collected within the first half of the year. A mid-term report from the Zambia Revenue Authority (ZRA) revealed that it had only managed to collect K66.1 billion (about 85 percent) of its mid-term target. With tax revenues making up over 80% of domestic revenue in 2025, the ongoing economic constraints make this difficult to achieve.

Moreover, the 2025 national budget has not proposed any significant changes to the tax regime that could see a rapid growth in revenues. Proposed tax measures—such as the introduction of a surtax on imported goods competing with local products— objectively aim to enhance local industry competitiveness. However, the surtax’s narrow scope benefits a limited segment of companies and is unlikely to foster broad-based industrial growth. Achieving successful domestic resource mobilisation in Zambia requires actively supporting productivity in key growth sectors such as energy, mining, and agriculture.

Budget Implications for Key Sectors: Energy, Mining, and Agriculture

The energy sector has been allocated K2.3 billion in 2025, with a focus on stabilising electricity supply through infrastructure improvements and rural electrification. While these measures are essential, there is a notable gap in funding for renewable energy sources including geothermal, which could diversify Zambia’s energy mix. With over 80% of the country’s energy relying on hydropower, Zambia remains vulnerable to climate variability. The limited emphasis on renewables in the 2025 budget risks perpetuating energy insecurity, particularly given the drought conditions that have affected hydropower output.

Mining continues to be the backbone of Zambia’s economy, yet the budget falls short in addressing critical challenges in this sector. Despite prior assurances of prioritising mineral value addition, there are no substantial investments or incentives allocated for this purpose in the 2025 budget. This limits Zambia’s ability to capture a greater share of the mining value chain, leaving the nation vulnerable to fluctuations in global commodity prices.

In addition, the budget reveals a worrying reduction in allocations to mining health and safety and environmental protections. Small-scale and artisanal mining, a significant segment of Zambia’s mining landscape, remains inadequately supported, increasing risks of accidents and environmental degradation.

Agriculture, recognised as a key sector of Zambia’s economy and food security, has receive heavy funding for the Farmer Input Support Programme (FISP) and the Food Reserve Agency (FRA) in 2025. While understandable given the drought faced by the country, limited resources have been spared for critical productivity-enhancing initiatives such as irrigation, mechanisation, and disease control. The recent drought has highlighted the sector’s vulnerability to climate shocks, underscoring the need for investments that build resilience beyond input subsidies.

Notably, the Comprehensive Agricultural Transformation Support Programme (CATSP), while ambitious, remains under-resourced. Effective implementation of CATSP requires a shift towards long-term investments that enhance productivity and market access for smallholder farmers.

Conclusion

Zambia’s 2025 budget sets ambitious targets for growth and resilience, but its potential is undermined by structural gaps. The revenue goals, while aligned with high growth aspirations, may falter amidst current economic constraints, given the lack of substantial reforms to expand revenue collection through productivity gains. Key sectors—energy, mining, and agriculture—receive allocations that fall short of the transformative investments required. Without a strategic focus on renewable energy, mineral value addition, and enhanced agricultural productivity, Zambia remains vulnerable to external shocks and climate risks.

About the Author

Ibrahim Kamara serves as the Head of Research at the Centre for Trade Policy and Development. He holds a bachelor’s degree in economics and finance as well as a master’s degree in public finance and taxation from the University of Lusaka. Ibrahim also served as the Coordinator for the Zambia Tax Platform until 2023.