Zambia Unveils Sovereign Wealth Fund Plans

Zambia is set to launch a sovereign wealth fund in 2025 as the Southern African country seeks to shield itself from future shocks after several years of economic volatility.

The Industrial Development Corporation IDC, a state-owned enterprise which invests across industries with the aim of strengthening Zambias industrial base and creating jobs, released a statement that said they would be establishing the sovereign wealth fund next year.

It said that the primary goal of the fund is to support the public finances in times of financial distress, as well as to make long-term investments in strategic sectors such as health, education, farming, energy, and infrastructure.

The IDC said, the wealth fund will allow us to invest the surplus revenues from our natural resources and other sources, ensuring financial stability.

The Zambian authorities believe that streamlining minerals licencing could be worth up to 1bn, capital which will then be injected into the new sovereign wealth fund. Dividends from IDCs existing portfolio companies will provide further cash. However, most of the capital for the sovereign wealth fund will come from mining revenues. Zambia is Africas second biggest exporter of copper, which accounts for more than 6bn of its annual revenue. In 2021, the mining sector contributed 17.5 to Zambias GDP and over 70 of its foreign exchange earnings.