On Wednesday, Zambian deputy finance minister, Christopher Mvunga, said that the country’s economy is expected to grow by 3.7% in 2016, with a forecast of 4% growth in 2017.
Mvunga told Reuters in an interview at a mining conference in Cape Town: “Stabilising power supply, especially to the mines, should give us an upside. Our GDP outlook is on a positive trajectory.”
Zambia, Africa’s second largest copper producer, experienced a slow-down in growth due to a power shortages last year.
In 2015, Zambian power providers and local mining companies agreed to cut power supply to local mines by 30% as the country faced a significant power shortage.
The mines were supplied with 70% of locally produced power and will have to import 30% back-up power at a high cost.
President of the Chamber of Mines, Jackson Sikamo, said at the time that the agreement was reached with Glencore Plc and First Quantum Minerals.
According to the World Bank, Zambia’s GDP growth will fall below 4% in 2016 due to a combination of domestic and international pressures, but expansion will increase in subsequent years, Reuters reported.
Mvunga said the central bank did not sell dollars to stabilise the country’s struggling currency, the kwacha.
Mvunga said: “We are not using reserves by any means to stabilise the kwacha, absolutely not. But we are looking at areas where we can reduce imports which are not critical to reduce the strain on demand for dollars.”
Reuters reported that Mvunga noted the mines production was not affected by the reduced power supply: “There are non-core mining activities, like golf clubs, that’s where power has been removed. We are not impacting the core production areas of the mines.”
“Despite the power cuts and closure of mines, copper production inched higher to 711,515 tonnes in 2015 from 708,000 tonnes the previous year after a new mine owned by Canada’s First Quantum Minerals started production, according to data from the chamber of mines,” Reuters reported.