<h1>Zambia economic month in review: October 2026</h1>KSJ’s monthly round-up of Zambia’s economic data for October 2026: prices, the kwacha, interest rates, money and trade, and what drove them. <h2>At a glance</h2><ul><li>Annual inflation: 6.3% in October (6.1% in September)</li><li>Breakfast mealie meal: K235.86 a 25 kg bag in October</li><li>Kwacha: K19.42 per US dollar in September (monthly average)</li><li>Copper: $14,416 a tonne in September</li><li>Policy rate: 13.25% at the end of September</li><li>Trade: a deficit of $186.4m in September</li></ul><h2>What happened in October</h2>October brought a mixed picture for Zambia's economy. Inflation edged higher for the first time since December 2025, but the increase was driven by non-food prices rather than food. Fuel prices recorded a sharp increase during the month, while mealie meal prices remained lower than a year earlier.The kwacha also came under renewed pressure, even as copper prices remained strong. Meanwhile, Government's K19.9 billion supplementary budget put domestic borrowing, interest rates and the availability of credit to businesses back into focus.The 2027 Budget, initially scheduled for 30 October, was postponed to 6 November. Its eventual presentation will provide a clearer picture of Government's fiscal position and financing requirements heading into 2027. <h2>Prices</h2>Annual inflation rose to 6.3% in October from 6.1% in September, its first rise since December 2025. Prices rose 0.7% during October itself, after 0.4% in September.Food inflation fell to 5.7% in October from 5.8% in September, while non-food inflation rose to 7.4% from 6.6%.<code>[[chart:review-2026-10-inflation]]</code>The split is important. Food prices continued to ease, helping to contain the overall inflation rate, while non-food prices accelerated. The increase in fuel prices was a major part of that shift, with implications for transport and the cost of moving goods around the country.The national average price of a 25 kg bag of breakfast mealie meal fell 0.2% to K235.86 in October, 10.2% lower than a year earlier. Roller mealie meal fell 0.1% to K181.99 in October, 11.8% lower than a year earlier. A 20-litre tin of maize grain rose 5.2% to K106.98 in October.<code>[[chart:review-2026-10-mealie-meal]]</code>At the pump, petrol rose 24.4% to K31.46 in October, and diesel rose 23.8% to K33.25 (national averages per litre).<code>[[chart:review-2026-10-fuel]]</code>The fuel increase was one of October's clearest price shocks. Unlike a rise in the price of one food item, fuel can spread through the economy via transport, distribution, production and other operating costs.That makes the composition of inflation worth watching in the months ahead. Food prices are providing some relief, but energy and other non-food costs are moving in the opposite direction. <h2>Markets</h2>The latest figures here are for September 2026, as published by the Bank of Zambia; each figure gives its month.The kwacha averaged K19.42 per US dollar in September, weaker than in August (K18.90) and stronger than a year earlier (K23.78). At bureaux de change the dollar averaged K21.60, 11.2% above the official rate.<code>[[chart:review-2026-10-kwacha]]</code>The September average does not capture the full movement seen during October, when the kwacha came under renewed pressure. A weaker currency matters beyond the foreign-exchange market because Zambia imports fuel, machinery, vehicles, food and a wide range of intermediate goods.Copper rose 1.9% to $14,416 a tonne in September; Dubai crude rose 18.5% to $95.56 a barrel (monthly averages).<code>[[chart:review-2026-10-copper-oil]]</code>For Zambia, the two commodities move in opposite directions economically. Higher copper prices strengthen export earnings and foreign-exchange supply, while higher oil prices increase the country's import bill.The Bank of Zambia’s policy rate stood at 13.25% at the end of September, unchanged since May. Commercial banks’ average lending rate rose to 27.70% in September from 27.29% in August. The interbank rate held at 13.25% in September. At the Treasury bill auctions, the 91-day yield fell to 9.75% in September from 10.50% in August, and the 364-day yield fell to 11.90% from 12.10%.<code>[[chart:review-2026-10-rates]]</code>The rate picture remains mixed. Treasury bill yields have fallen, but commercial bank lending rates remain high. In other words, lower short-term government yields have not yet translated into cheap borrowing for businesses and households.That distinction becomes more important as Government seeks additional domestic financing. The K19.9 billion supplementary budget could increase competition for domestic funds, making the interaction between Government borrowing, liquidity and private-sector credit an important issue to watch. <h2>Money &amp; banking</h2>The latest figures here are for August–September 2026, as published by the Bank of Zambia; each figure gives its month.Broad money (M3) was 3.9% larger in August than a year earlier, against 7.7% in July. Credit to the private sector stood at K106.0bn at the end of August, 9.7% higher than a year earlier. Commercial banks’ kwacha loans came to K108.6bn, 17.0% higher than a year earlier. Banks’ core liquid assets averaged 59.07% of deposits in September, against a required minimum of 6.00%.<code>[[chart:review-2026-10-money-growth]]</code><code>[[chart:review-2026-10-credit]]</code>The banking system therefore remains highly liquid, while lending continues to grow. But liquidity and affordability are not the same thing. Businesses may have access to a banking system with substantial liquidity while still facing borrowing costs that make investment and expansion difficult.The next question is whether credit growth can continue without putting additional pressure on inflation, the exchange rate or the cost of domestic financing. <h2>Reserves &amp; trade</h2>The latest figures here are for June–September 2026, as published by the Bank of Zambia (reserves) and the Zambia Statistics Agency (trade); each figure gives its month.Gross international reserves stood at $5,802m at the end of June, down 10.6% on the month, enough to pay for about 4.5 months of imports.<code>[[chart:review-2026-10-reserves]]</code>Zambia ran a trade deficit of $186.4m in September, after a surplus of $48.0m in August. Exports fell 8.1% to $1,606.4m in September, and imports rose 5.4% to $1,792.8m.<code>[[chart:review-2026-10-trade]]</code>The trade deficit is a reminder that strong commodity prices alone do not determine Zambia's external position. Export earnings also depend on the volume and timing of shipments, while imports determine how much foreign exchange leaves the country.For the kwacha, the combination of strong copper prices, higher import demand and movements in the oil price will remain important as the year draws to a close. <h2>What October tells us</h2>October's economic story is less about the headline inflation rate than about what is happening underneath it.Food prices are relatively contained. Mealie meal is cheaper than a year ago and food inflation continues to ease. But fuel prices jumped sharply, pushing non-food inflation higher and creating a potential second-round effect across transport and business costs.The kwacha also came under renewed pressure, while copper remained a major source of external support. At the same time, commercial lending rates remain high despite lower Treasury bill yields.The fiscal picture is becoming increasingly important. Government's K19.9 billion supplementary budget, and the proposed reliance on domestic borrowing, means that fiscal financing could increasingly influence interest rates, liquidity and private-sector access to credit.The 2027 Budget, now due in November, will provide the next major test.For businesses, the question going into November is therefore not simply whether inflation is rising or falling. It is whether fuel prices, the kwacha and Government borrowing begin to reinforce one another — or whether strong copper earnings and easing food prices continue to provide a buffer. <h2>About the data</h2>Inflation, household prices and trade come from the Zambia Statistics Agency’s monthly bulletin; the kwacha, commodity prices, interest rates, money, banking and reserves from the Bank of Zambia’s fortnightly statistics. Monthly figures are averages for rates and prices and end-of-month levels for stocks. Data available: Prices to October 2026; Markets to September 2026; Money &amp; banking to August–September 2026; Reserves &amp; trade to June–September 2026. The charts end at October 2026; explore every series on <a href="https://www.katondostreet.com/analytics" rel="noopener noreferrer" target="_blank">KSJ Analytics</a>.

Inflation at 6.3% in October, the kwacha at K19.42 per dollar in September, copper at $14,416 a tonne, a deficit of $186.4m on trade.

KSJ Monthly Economic Review: October 2026

<h3>The pump-price increase will hit transport first, food next — but the bigger inflation risk may be the kwacha</h3>Zambia’s latest fuel-price adjustment was hard to miss.In September, petrol rose from about K25.29 to K31.46 per litre, while diesel increased from K26.86 to K33.27. That is roughly a 24% increase in pump prices in a single month.The immediate question for households and businesses is straightforward: how much of that increase will eventually show up in the prices of everything else?To get a sense of the answer, we analysed 15 years of Zambian data, covering fuel prices, inflation, food prices, the exchange rate, international oil prices and trade activity between 2011 and 2026.The results suggest that fuel does matter — but its effect is slower and smaller than the size of the pump-price increase might suggest. <h2>Fuel does push inflation higher</h2>Our estimates indicate that a 1% increase in pump prices is associated with roughly a 0.07% increase in the overall price level within a year.Applied to September’s roughly 24% increase, this translates into an estimated 1.5–1.7 percentage-point addition to annual inflation at the peak, assuming other factors remain unchanged.That is meaningful.With inflation at 6.1% in September, a fuel shock of this size could, on its own, push inflation towards the upper end of the Bank of Zambia’s 6–8% target range.But it is important to put the estimate in perspective. Fuel is only one part of the inflation story. <h2>The shock takes months to work through the economy</h2>The impact of a fuel increase does not arrive everywhere at the same time.First come transport costs.Within the first few weeks, higher petrol and diesel costs begin feeding into bus fares, taxi charges and freight costs. Transport is the fastest channel through which the fuel shock appears in our analysis.Food comes later.Diesel is an input into the movement of maize, mealie meal, vegetables and other goods. It also affects milling, distribution and other parts of the supply chain.As a result, food prices respond more slowly, with the effect building over several months.Our estimates suggest that the overall inflation impact is largest at around five months after the initial fuel-price increase.For the September adjustment, that points to early 2027 as a period when the fuel-related inflation pressure could be at its strongest. <h2>Why households may feel it most at the market</h2>For many households, the most important question is not what happens to the headline inflation rate. It is what happens to the price of food.Food accounts for a significant share of household spending, making this channel particularly important.Using national average prices from ZamStats, our estimates suggest that a fuel increase of September’s magnitude could eventually add roughly K30–40 to the price of a 25 kg bag of roller mealie meal, from a current price of around K182.But this is one of the areas where caution is particularly important.Fuel is not the main determinant of the price of mealie meal. Maize availability, rainfall, harvests, stocks and other supply conditions can have much larger effects.In a good harvest year, the fuel effect could be relatively small compared with favourable maize supply.In a poor harvest year, however, higher fuel costs could add another layer of pressure. <h2>When fuel prices fall, prices may not follow</h2>There is another feature of the data that matters for consumers.Fuel-price increases and decreases do not appear to have perfectly symmetrical effects.When fuel prices rise, the resulting increase in costs tends to persist. When fuel prices subsequently fall, other prices do not necessarily fall by the same amount or at the same speed.Transport operators, traders and retailers may reduce their costs, but prices across the economy can remain sticky.This means a future reduction in pump prices should not automatically be interpreted as a reversal of the September increase in the cost of living. <h2>The kwacha may be the bigger inflation story</h2>Perhaps the most important finding from the analysis is that fuel prices are not the dominant driver of inflation in Zambia.Our estimates suggest that changes in pump prices explain only around 2–3% of movements in inflation.The exchange rate accounts for a considerably larger share, at roughly 15–23%.A 1% depreciation of the kwacha against the US dollar is estimated to raise consumer prices by about 0.3% over a year — roughly four times the estimated effect of a 1% increase in fuel prices.Food-price shocks, particularly those linked to agricultural conditions, account for much of the remaining variation.This distinction matters because the fuel price and exchange rate are closely connected.Zambia imports its fuel and pays for it in foreign currency. When the kwacha weakens, the local-currency cost of importing fuel rises, putting pressure on pump prices.That means an economy can face a double shock: a weaker kwacha raises the cost of imported goods while simultaneously making fuel more expensive.Historical episodes illustrate the point. The sharp inflation increases of 2015–16 and 2020–22 coincided with substantial exchange-rate pressures, alongside other domestic and external shocks. <h2>There is also a growth cost</h2>The effect of higher fuel prices is not limited to inflation.Businesses face higher transportation, production and distribution costs, while households have less money available for other spending.Because Zambia does not publish monthly GDP figures, we constructed an economic activity indicator using variables including imports of production and consumer goods, copper prices and borrowing costs.The indicator suggests that fuel-price increases are followed by a slowdown in economic activity over the subsequent two to seven months.Firms may reduce purchases of inputs, while households cut back on discretionary spending.The estimated effect is subject to considerable uncertainty, so it is better interpreted as evidence of a direction of impact rather than a precise forecast of how much GDP will fall. <h2>What the September increase means</h2>For households, the sequence is likely to be familiar: transport costs first, followed by broader price pressure — particularly food — over the following months.For businesses, sectors that depend heavily on logistics, including agriculture, retail, distribution and construction, are likely to face the pressure early.For policymakers, the fuel increase creates a meaningful inflation shock, but the wider picture is more complicated.The bigger risk is not necessarily fuel prices in isolation. It is fuel prices rising at the same time as the kwacha weakens and food supply comes under pressure.That combination would give inflation several channels through which to accelerate.The September fuel adjustment therefore tells only part of the story.The bigger question for Zambia’s cost of living in the months ahead may be what happens to the kwacha, food supply and the wider economy alongside the fuel price.Note: These are model-based estimates using historical Zambian data from 2011–2026. They are not forecasts of actual future prices. The estimates assume other factors remain unchanged and carry uncertainty, particularly for individual food products.

What September’s Fuel Hike Means for Zambia’s Economy

Petrol rises to K31.46, diesel to K33.27 per litreFuel is getting noticeably more expensive from tonight.The Energy Regulation Board (ERB) has raised petroleum prices for October, with petrol increasing by K6.17 per litre and diesel by K6.41.The new prices take effect at midnight on 30 September 2026.Petrol will now cost K31.46 per litre, up from K25.29, while diesel rises to K33.27, from K26.86.Kerosene increases from K27.02 to K29.76, while Jet A-1 rises from K28.71 to K31.85.<h3>So, what happened?</h3>The ERB points to three things: higher international oil prices, a weaker kwacha and the return of excise duty.During the review period, the average international price of petrol increased from US$104.94 to US$121.58 per barrel. Diesel also rose, from US$150.92 to US$160.88.At the same time, the kwacha weakened against the US dollar, moving from K19.28 to K19.76 per dollar.Together, those movements increased the cost of petroleum imports.But there is another part of the story.<h3>The tax relief is ending</h3>From April to September, Government suspended excise duty on petroleum products and zero-rated VAT as part of measures to cushion consumers from higher fuel prices.That helped keep pump prices lower.Now the temporary relief period has ended.Government has reinstated excise duty from October, although the ERB says VAT will remain zero-rated until 1 December 2026.So October's increase isn't simply about what happened to oil prices internationally. The return of excise duty is also now showing up at the pump.<h3>What does it mean for motorists?</h3>Quite simply, filling up will cost more.A 50-litre petrol tank will now cost about K1,573, compared with K1,264.50 under the September price.For diesel, 50 litres will cost about K1,663.50, compared with K1,343 previously.That's roughly K309 more for petrol and K321 more for diesel for a 50-litre fill-up.And fuel prices rarely stay confined to the filling station.Diesel is an important input for transport, agriculture, mining, construction and logistics. Higher fuel costs can therefore increase the cost of moving people and goods, with some of that pressure potentially feeding into prices elsewhere in the economy.The ERB says its price-smoothing measures helped moderate the increase and that, despite the adjustment, Zambia's fuel prices remain competitive within the region.For now, however, the immediate reality is simple:From tonight, filling up costs more.Source: Energy Regulation Board, October 2026 Petroleum Pump Price Review, 30 September 2026.

Fuel prices jump as ERB raises pump prices

Zambia has declared a new cholera outbreak after 304 cases and 11 deaths were recorded in seven districts across five provinces.The figures, released by the Ministry of Health on September 29, show that 62 cases have so far been laboratory-confirmed, while 35 patients remain under treatment and 230 have been discharged.But perhaps the most worrying number is not the total number of cases. It is where some of the deaths are occurring.Eight of the 11 deaths happened in communities, compared with three at health facilities. According to Acting Health Minister Dr Gilbert Siame, this points to concern about people reaching health facilities too late.<h3>Lusaka and Chibombo drive the numbers</h3>Lusaka currently has the largest number of reported cases, with 130 cases, including 39 confirmed infections. Four deaths have been recorded, 94 patients have been discharged and 32 are still receiving treatment.Chibombo follows closely with 109 cases, including 11 confirmed cases. The district has recorded four community deaths, while 95 people have been discharged and 10 remain under treatment.The Mwanjuni catchment area around 10 Miles has been identified as a major area of concern in Chibombo.Smaller numbers have been reported in Chongwe, Nsama, Chiengi, Chilanga and Chikankata.The outbreak was first detected in August. The index case was identified on August 13 after Vibrio cholerae was confirmed in a patient who had travelled from Chibombo and was admitted to Apollo Mini Hospital in Lusaka.<h3>The response is now moving into communities</h3>The Ministry says health teams are carrying out active case finding, laboratory testing and household visits in affected areas.The response includes distributing chlorine, testing water sources, super-chlorinating shallow wells and disinfecting affected areas.Oral rehydration points and treatment services have also been established, while Government is assessing whether reactive oral cholera vaccination will be necessary.For households, the basic message remains familiar but important: water and hygiene matter.The Ministry is urging people to drink only safe, chlorinated or boiled water, wash their hands properly, use toilets or latrines and cook food thoroughly.Anyone experiencing profuse watery diarrhoea, vomiting or signs of dehydration should seek medical attention immediately and start oral rehydration while making arrangements to reach a health facility.<h3>Why the community deaths matter</h3>Cholera can cause severe dehydration very quickly. That makes the time between the first symptoms and treatment particularly important.With eight of the 11 deaths occurring outside health facilities, the outbreak is also becoming a question of how quickly people recognise symptoms, seek help and can access treatment.The Ministry is asking communities to cooperate with health workers conducting investigations, household visits and water testing, while avoiding stigma against people and families affected by the disease.For now, the outbreak is concentrated in seven districts. But with cases spread across five provinces, the response is already broader than a single-community health problem.Source: Ministry of Health | 📸 MoH

Cholera Is Back: Zambia Records 304 Cases and 11 Deaths

Zambia's latest inflation number looks encouraging.Annual inflation fell from 6.2 percent in August to 6.1 percent in September, the lowest level since February 2018. Food inflation also eased, from 6.0 percent to 5.8 percent, while non-food inflation remained at 6.6 percent.But there is a danger in reading the 6.1 percent figure as simply meaning that life is becoming cheaper.It isn't.What is happening is more subtle: the rate at which prices are rising has slowed. The prices themselves remain elevated. <h2>Think of inflation as the speed of a car</h2>The easiest way to understand this is to think about a car.If a car is moving at 80 kilometres per hour and the driver reduces speed to 70, the car is still moving forward. It has not started going backwards.Inflation works in much the same way.When inflation falls from 6.2 percent to 6.1 percent, prices are still moving upwards. They are simply increasing at a slightly slower pace.So Zambia has not entered a period of falling prices.It has entered a period where the increase in prices is moderating.That distinction is particularly important for households because the price increases of previous years are already built into the prices people face today. <h2>Zambia's inflation story is increasingly a food story</h2>The September numbers tell us something important about where the moderation is coming from.Food inflation fell to 5.8 percent from 6.0 percent. ZamStats attributes the movement mainly to price changes in cereals, vegetables, groundnuts and dried beans.That matters enormously in Zambia.For a household, food is not an occasional purchase. It is a recurring and unavoidable expense.So even a relatively small moderation in food-price increases can help ease pressure on household budgets.But we should also look at what has not changed.Non-food inflation remained at 6.6 percent.That tells us that the moderation is not yet broad-based across the entire consumer basket. Some of the pressure outside food is still present. ZamStats points to movements including passenger air transport and vehicle prices among the factors affecting non-food inflation. <h2>The monthly number gives us another warning</h2>There is another detail that deserves attention.While annual inflation fell, monthly inflation increased from 0.2 percent in August to 0.4 percent in September.This is important because annual inflation looks backwards over twelve months, while monthly inflation gives us a more immediate sense of what happened to prices during the latest month.So we have an interesting combination:Year-on-year inflation is coming down, but prices still increased during September, and they increased faster than they did in August.That is another reason not to interpret 6.1 percent as "prices are falling."They are not. <h2>Why households may not feel the improvement</h2>This is where the official statistics and household experience can appear to diverge.Suppose a family was spending K2,000 a month on a particular basket of essentials.If prices rise, that basket might eventually cost K2,100, then K2,200.If inflation subsequently slows, the basket does not return to K2,000.It may simply move from K2,200 to K2,250 instead of K2,200 to K2,300.For the economist, that is an improvement in inflation.For the household, however, the K2,250 still has to come out of the monthly budget.That is why lower inflation and a high cost of living can exist at the same time. <h2>Zambia also has a currency story</h2>The exchange rate matters considerably for Zambia because the country imports many of the goods, inputs and fuels that eventually feed into domestic prices.A more stable currency can reduce the pressure coming from imported inflation by making imported goods and inputs relatively less expensive in kwacha terms.Recent commentary on Zambia's inflation has pointed to a relatively resilient kwacha as one factor helping to contain price pressures.But this is not something households should take for granted.A renewed weakening of the currency, combined with higher international commodity or fuel prices, could quickly feed into domestic costs.That is particularly relevant because Zambia's inflation outlook remains exposed to global oil-price developments. The IMF has warned that higher global oil prices and geopolitical tensions could put renewed pressure on inflation and the exchange rate. <h2>Then there is fuel</h2>This may be one of the most important issues going forward.Government has been using temporary tax relief on fuel — including the suspension of excise duty and zero-rating of VAT on petrol and diesel — as part of efforts to cushion consumers and businesses from high fuel costs. The current extension runs through September 30, 2026.That matters because fuel is not just a line item on the household budget.Fuel affects transport, distribution, agriculture, manufacturing and ultimately the price of goods in shops.So as we move beyond September, one of the questions for the inflation outlook is how fuel prices will behave once these temporary measures expire.The September inflation number therefore needs to be viewed as a snapshot, not the end of the story. <h2>The real test is purchasing power</h2>Ultimately, the most useful way to judge the cost-of-living situation is not simply to ask whether inflation is falling.We should ask:Are Zambians' incomes growing faster than the prices of the things they need?If inflation falls from 10 percent to 6 percent but wages and household incomes are barely changing, families can still feel financially squeezed.Conversely, if incomes grow faster than prices, households can experience an improvement in purchasing power.That is why the conversation about inflation should move beyond the headline number.6.1 percent is good information. But it is not the whole household story.The encouraging part is that Zambia's annual inflation rate has been trending down for several months, reaching its lowest level since February 2018.The caution is that monthly prices are still rising, non-food inflation remains at 6.6 percent, and important risks remain around fuel, the exchange rate and external commodity prices.So the most accurate description of the current situation is perhaps this:Zambia is seeing slower price increases, not lower prices.And for households, the difference between those two statements is enormous.

Zambia's Inflation Is Slowing. But the Cost-of-Living Story Is More Complicated

For Zambia, a rise in US government bond yields is more than a Wall Street development. It can influence how expensive it becomes for the country to borrow abroad, how investors price Zambian assets and how much pressure the kwacha faces against the dollar.The yield on the US 30-year Treasury rose to around 5.44% on Thursday, its highest level since 2004, while the benchmark 10-year yield climbed above 5.1%.The move matters because US Treasury yields form a reference point for borrowing costs across much of the global financial system. When those yields rise, emerging markets such as Zambia can face higher financing costs even when their own domestic interest rates have not changed.The immediate trigger was a combination of stronger-than-expected US economic activity, expectations of further Federal Reserve tightening and rising oil prices.For Zambia, however, the bigger question is what a prolonged period of higher global interest rates means for a country still rebuilding its fiscal and external position after years of debt stress.<h3>Why Zambia should pay attention</h3>US Treasury securities sit at the centre of the global financial system. They are widely used as a benchmark for pricing other forms of debt.When Treasury yields rise, investors can demand higher returns from riskier assets as well.For an emerging market such as Zambia, that can increase the cost of accessing international capital.A Zambian government or company seeking to borrow in international markets does not compete with US Treasuries on equal terms. Investors generally demand an additional risk premium for lending to countries perceived to carry greater economic, currency or credit risk.If the underlying US interest rate rises, the overall cost of borrowing can therefore increase even if Zambia's own risk premium remains unchanged.<h3>The dollar channel</h3>Higher US yields can also make dollar-denominated assets more attractive to international investors.That can contribute to capital moving towards US markets and away from some emerging markets.For Zambia, movements in the dollar are particularly important because much of the country's external debt and international trade is denominated in foreign currencies.A stronger dollar can increase the local-currency cost of servicing dollar-denominated obligations and make imports more expensive.The effect is not automatic. Exchange rates also depend on copper export receipts, domestic monetary policy, foreign-exchange supply and demand, inflation and investor confidence.<h3>Copper provides a counterweight</h3>Zambia has an important advantage that many emerging markets do not: copper.Strong copper prices can increase export earnings and foreign-exchange inflows, providing support for the kwacha and improving the country's external position.But copper cannot completely shield Zambia from global financial conditions.If international interest rates remain elevated, investors may still become more selective about emerging-market assets. The country can therefore benefit from stronger commodity revenues while simultaneously facing a more expensive global financing environment.<h3>The debt lesson</h3>The latest Treasury move also underlines why Zambia's debt restructuring is only one part of the country's long-term financing challenge.Even after restructuring, future borrowing will be priced against prevailing international interest rates and the risk investors attach to Zambia.This makes fiscal discipline, export earnings, foreign-exchange reserves and the credibility of economic policy important determinants of future borrowing costs.For policymakers, the implication is straightforward: Zambia cannot influence the Federal Reserve, but it can influence how exposed the country is to changes in global financial conditions.The rise in US Treasury yields is therefore a reminder that Zambia's economic fortunes are shaped not only by what happens in Lusaka or Copperbelt mining towns, but also by decisions made in Washington and movements in global capital markets.When the price of money rises in America, emerging markets eventually feel it — and Zambia is no exception.

US Bond Yields Rise, Putting Zambia on Notice

Wall Street took a step back on Wednesday as rising Treasury yields, renewed tensions around Iran and weakness in some of the biggest technology names combined to put pressure on US stocks.The S&amp;P 500 fell 0.65% to 7,714.35 points, while the Nasdaq dropped 1.07% to 26,953.87. The Dow Jones Industrial Average was down 0.54% at 51,583.98.Much of the day's attention, however, was outside the stock market.Oil prices climbed more than 3% after Iranian President Masoud Pezeshkian told the United Nations that Tehran would not surrender to US pressure. His comments came a day after US President Donald Trump warned that the US could "annihilate" Iran.The immediate market concern is straightforward: a deeper Middle East confrontation could disrupt energy markets and push inflation higher.That was reflected in energy stocks. The S&amp;P 500 energy sector gained about 1%, while higher oil prices added another layer of uncertainty for investors already watching interest rates closely. <h2>Rates are back in the conversation</h2>The bigger story for Wall Street, though, may be the bond market.A survey of US business activity showed the economy accelerating to its strongest pace in more than five years in September. The stronger economic data pushed Treasury yields higher as investors reassessed the path of US interest rates.Two-year Treasury yields reached their highest level since 2024, while the 10-year yield touched its highest level since 2007.For equity investors, that matters because higher yields increase the return available from relatively safer government debt while also raising borrowing costs for companies and consumers.The market is therefore facing a familiar tension: a stronger economy is good news in isolation, but if that strength keeps inflation elevated, the Federal Reserve may have less room to cut rates.Traders were pricing in a 71% probability of another Fed rate increase at the October meeting, according to CME Group's FedWatch Tool.Federal Reserve Governor Michael Barr also said further rate increases may be necessary, with inflation still above the central bank's 2% target. <h2>Big Tech shows cracks</h2>Technology stocks, which had helped push Wall Street towards record highs in recent sessions, were among Wednesday's notable decliners.Alphabet fell 3.5%, while Amazon dropped 2.4%. Nvidia declined 1.6%, contributing to a 1.4% fall in the PHLX semiconductor index.Meta, however, moved in the opposite direction, gaining 2.3%. The company's shares have now risen about 13% this week following a strong reception for its "Muse" AI assistant.The contrasting performance highlights an increasingly important feature of the AI trade: investors are no longer treating every technology company as an automatic winner from the AI boom.AI is creating opportunities for companies providing computing infrastructure and software, while potentially disrupting established businesses in areas ranging from advertising and banking to online commerce.Amazon's decision to block Muse from its shopping platform adds another dimension to that competition.Travel companies also had a difficult session, with Expedia and Airbnb both falling more than 6%. <h2>The market is still close to its highs</h2>Despite Wednesday's pullback, the broader market remains relatively elevated.The Nasdaq had recorded record-high closes in each of the previous two sessions, while the S&amp;P 500 remains less than 2% below its record closing level from August 13.The S&amp;P 500 is trading at just under 19 times expected earnings, according to LSEG data. Much of the improvement in earnings expectations has been driven by major companies linked to the AI investment cycle.That leaves investors balancing two very different stories.On one side is a US economy showing considerable strength and an AI sector still attracting enormous investor interest.On the other is a combination of geopolitical risk, higher oil prices and rising bond yields that could keep interest rates higher for longer.For markets, the question is increasingly whether economic strength can continue without producing another round of inflation pressure.For now, Wednesday's trading suggested investors are becoming less willing to ignore that risk.

Wall Street Pulls Back as Oil Rises and Rate Fears Return

&nbsp;As farmers prepare for the 2026/27 season, they are being urged to leave crop residues on their fields rather than burn them.SeedCo Zambia Product Development Manager Katowando Chawinga said retaining stubble can create a natural mulch that helps soil hold moisture during periods of low rainfall.For farmers, the issue is practical. Once crop residues are burned, the soil is left more exposed to heat and drying. Leaving the material on the field provides ground cover while it gradually breaks down.The advice comes as farmers prepare for a season in which rainfall patterns and dry spells could put additional pressure on crops.For smallholders, moisture conservation can be as important as rainfall itself. A field that receives rain but quickly loses that moisture can still face stress when the next rains are delayed.The choice to leave residues behind is therefore more than a question of field clearing.In a season of uncertain rainfall, what stays on the soil may matter almost as much as what falls from the sky.

Farmers Urged to Leave Crop Residues as El Niño Risk Looms

When the price of fuel rises, the pain is immediate. It appears at the filling station, in transport fares, in the cost of moving goods and eventually in the prices consumers pay for food and other essentials. That is why the Zambian Government's decision to suspend excise duty and zero-rate Value Added Tax (VAT) on petrol and diesel imports made economic sense when it was introduced in April 2026. With global oil prices rising amid the crisis in the Middle East, the measure was intended to cushion households and businesses from another fuel-price shock.But there is another side to the policy that is less visible to the public. Someone still has to pay for the relief. In this case, that someone is the Treasury.The Government initially introduced the fuel tax relief for three months, from April to June 2026, before extending it for another three months from July 1 to September 30. When the waiver was first introduced, Government estimated that the initial three-month intervention would cost approximately US$200 million in foregone revenue. That figure provides a useful benchmark for understanding the scale of the policy.If the original US$200 million estimate is spread evenly across the three months, the implied fiscal cost is approximately US$66.7 million per month. At that rate, the six-month period from April through September could represent roughly US$400 million in foregone revenue. By September 7, the implied cumulative cost would be around US$349 million. At an exchange rate of approximately K19 per US dollar, that translates into roughly K6.6 billion in foregone tax revenue. By the end of September, the figure could approach K7.6 billion.These figures should not be mistaken for audited Treasury outturns. They are a simple extrapolation from Government's original US$200 million estimate, and the actual cost will depend on fuel import volumes, international prices, exchange rates, consumption and the resulting tax base. Nevertheless, even as an indicative calculation, the numbers are large enough to change the nature of the debate. This is no longer simply a question of whether motorists should pay more or less for a litre of petrol or diesel. It is a question of what Zambia is willing to sacrifice from its public finances to keep fuel prices lower.There is a legitimate economic case for the waiver. Fuel is not an ordinary consumer product. Petrol and diesel are inputs into almost every part of the economy. Trucks require diesel to move goods. Farmers depend on fuel to operate machinery and transport produce. Businesses incur fuel costs in their logistics operations, while public transport operators face fuel costs that influence fares. When fuel becomes expensive, the shock travels through the economy. Reducing fuel taxes can therefore provide benefits beyond the person filling a private vehicle. It can reduce transport and logistics costs, moderate inflationary pressures and give businesses some breathing room.For Government, the argument is straightforward: sacrificing tax revenue today may prevent a much larger economic shock tomorrow. That is a legitimate economic policy argument. But it does not answer another important question: who actually benefits from the relief?A fuel tax waiver is a broad instrument. A household that consumes 50 litres a month receives some benefit, while a household consuming 500 litres receives considerably more. A small trader who occasionally purchases fuel benefits, but a large logistics company operating a fleet of trucks benefits substantially more. The policy therefore does not necessarily distribute the fiscal sacrifice according to economic need.This matters because Government is effectively using public revenue to reduce the cost of a commodity consumed disproportionately by those who consume more of it. An alternative approach could have been to use part of the fiscal space for more targeted interventions, such as cash transfers, public transport support, agricultural production or assistance to particularly vulnerable households and productive sectors. That does not automatically mean targeted support would have been better than the fuel waiver. It means the alternatives should be compared against the cost of the current policy.The political attraction of a fuel waiver is easy to understand. The benefit is visible. Consumers see the price at the pump. The fiscal cost is much less visible. There is no display at a filling station showing how much tax revenue Government has surrendered that month. That cost appears somewhere else, in the public finances, where it competes with spending on health, education, infrastructure, social protection and debt obligations.This creates a fundamental challenge for fiscal policy. If Government collects billions of kwacha less in VAT and excise duties, something else eventually has to adjust. It could be expenditure, borrowing, the fiscal deficit or pressure to increase other sources of revenue. This is particularly important for Zambia because the country is simultaneously trying to strengthen domestic revenue mobilisation and maintain fiscal consolidation.The International Monetary Fund has already highlighted the suspension of fuel VAT and excise duties as one of the factors contributing to weaker tax collection and a deterioration in Zambia's projected fiscal position. This creates an uncomfortable policy tension. Zambia needs stronger domestic revenue mobilisation, yet at the same time it is deliberately giving up a significant source of domestic revenue.There may be good economic reasons for doing this temporarily. The problem begins when temporary emergency relief becomes difficult to withdraw.The real test, therefore, should not simply be whether the fuel waiver reduced prices. It did. The more important question is whether the economic benefits are worth the revenue Zambia is giving up.Government should be able to estimate how much consumers have saved as a result of the policy, how much businesses have saved, how much inflation was avoided and how much of the benefit reached lower-income households. That would allow policymakers to answer a much more important question than the headline cost: what did Zambia get for the billions of kwacha it sacrificed?If the country gave up K7 billion but prevented a major inflationary shock, protected businesses, reduced transport costs and preserved household purchasing power, the policy may prove to have been worthwhile. If much of the benefit accrued to higher fuel consumers while the fiscal position deteriorated, then the same resources might have generated greater economic and social returns elsewhere.Without that analysis, Zambia knows the cost of the intervention but has only a partial picture of its return.The September 30 expiry of the current waiver should therefore be more than another administrative deadline. It should be an opportunity for Government to publish a proper assessment of the intervention before deciding whether to extend it again. How much revenue was actually forgone? How much did motorists save? What happened to transport costs? What happened to inflation? How much did businesses save? And perhaps most importantly, who benefited?There is also a need for greater transparency around the counterfactual. Zambians should know what the pump price would have been if VAT and excise duties had remained in place. Only then can citizens properly understand the size of the relief they are receiving and the fiscal price being paid on their behalf.The temptation in public policy is to celebrate the visible benefit while ignoring the invisible cost. But tax policy does not make costs disappear. A tax waiver simply transfers the cost from the consumer at the pump to Government's balance sheet. And ultimately, Government's balance sheet belongs to the public.The fuel waiver may have been the right decision when global oil prices were threatening another inflationary shock. But a policy can be justified when it is introduced and still require reassessment several months later. Circumstances change, fiscal pressures change and the cost of continuing an emergency intervention becomes increasingly important.Based on Government's original estimate of US$200 million for the first three months, Zambia could be approaching US$350 million in foregone revenue by early September, with the six-month cost potentially reaching approximately US$400 million by the end of September. At around K19 to the dollar, that is a potential fiscal sacrifice of more than K7 billion.That is too much money for the country to evaluate the policy simply by asking whether fuel is cheaper.The harder question is the one that matters: was the relief worth what Zambia gave up to provide it?Before another extension is considered, Government should give the public the numbers.Because cheap fuel at the pump is not free.Someone is paying the bill.

Zambia’s Fuel Tax Holiday Is Not Free — Someone Is Paying the Bill

There is something almost philosophical about El Niño.The name comes from the Spanish El Niño, meaning “the boy,” and historically referred to the appearance of unusually warm waters along the Pacific coast of Peru and Ecuador around Christmas — El Niño de Navidad, the Christ Child. Long before satellites, ocean buoys and sophisticated climate models, fishermen had already noticed that the ocean was capable of changing its behaviour and, with it, their livelihoods.There is an important lesson in that history.Nature often gives signals before it gives consequences.The challenge for societies is learning how to listen.For Zambia, this may matter again.A statistical and machine-learning forecasting system I have been developing using historical Oceanic Niño Index data from 1950 to 2026 has identified a very strong El Niño signal emerging in 2026.The latest observation in the model is June 2026. The recorded ocean temperature anomaly is +1.50°C, and the system classifies the current ENSO state as El Niño.More importantly, the historical series shows that the threshold was crossed around March 2026.The question is therefore no longer simply whether an El Niño signal exists.The more important question is:What should Zambia do with the information? <h2>The lesson of Pharaoh and Joseph</h2>There is an old story that offers a surprisingly modern way of thinking about this.In Genesis, Pharaoh dreams of seven years of abundance followed by seven years of famine. Joseph interprets the dream and recommends something remarkably practical: during the years of abundance, Egypt should save enough resources to survive the years of scarcity.Whether one approaches the story as theology, history, literature or economics, the underlying principle is powerful.A forecast is valuable not because it predicts the future perfectly, but because it gives society time to prepare for an uncertain future.That is precisely how we should think about El Niño.The objective should not be to claim that we can predict exactly how much rain Lusaka, Chipata or Choma will receive.Climate systems are considerably more complicated than that.The objective is to identify a sufficiently strong signal early enough to allow farmers, businesses, financial institutions and government to make better decisions.And right now, the signal deserves attention. <h2>The strange history of El Niño</h2>Looking through the historical ENSO record produces another interesting observation.The El Niño episodes identified in the historical series include years such as:1972, 1982, 1987, 1991, 1992, 1995, 1997, 2002, 2004, 2006, 2009, 2015, 2018 and 2023.At first glance, there appears to be something resembling a rhythm.1972 to 1982: 10 years1982 to 1987: 5 years1987 to 1991: 4 years1991 to 1992: 1 year1992 to 1995: 3 years1995 to 1997: 2 years1997 to 2002: 5 years2002 to 2004: 2 years2004 to 2006: 2 years2006 to 2009: 3 years2009 to 2015: 6 years2015 to 2018: 3 years2018 to 2023: 5 yearsIt is tempting to conclude that the cycle is getting shorter.But that would go beyond what the data can support.ENSO does not operate like a clock. Scientists generally describe El Niño and La Niña as irregular phenomena, with events commonly recurring every two to seven years rather than according to a fixed timetable.The more interesting observation is therefore not that the cycle is mechanically shortening.It is that the intervals can cluster remarkably closely.Nature appears to have memory without necessarily having a schedule.That is precisely the kind of problem for which statistical modelling becomes useful. <h2>What does the model say about 2026?</h2>The forecasting system does not rely on a single technique.It combines three different approaches.The first is a SARIMAX time-series model, designed to capture temporal patterns and persistence in the historical ENSO data.The second is a gradient-boosted machine-learning classifier, which looks for nonlinear relationships in the historical data and classifies the likely ENSO state.The third is a classical Markov-chain transition model, which approaches the problem from the perspective of transitions between states: El Niño, Neutral and La Niña.The forecasts are then blended.This is important because every model has weaknesses.A time-series model may capture persistence particularly well but fail to capture complex nonlinear relationships.A machine-learning model may detect patterns that a conventional statistical model misses, while also being more susceptible to historical peculiarities.A Markov model is comparatively simple, but it provides an independent perspective on how the system transitions between states.Rather than allowing one model to dictate the answer, the system asks what happens when these different approaches are considered together.And the answer is striking.<h3>September 2026 forecast</h3>Using information available through June 2026, the blended forecast for September 2026 is:El Niño: 94.1%Neutral: 5.5%La Niña: 0.4%The system therefore identifies El Niño as overwhelmingly the most likely ENSO state for September 2026.See app in detail below:<a href="https://elnino.streamlit.app/" rel="noopener noreferrer" target="_blank">https://elnino.streamlit.app/</a>The app's live classification layer produces an even stronger signal, assigning approximately 99.1% probability to El Niño, against 0.8% for Neutral and 0.1% for La Niña.That does not mean there is a 94.1% probability that Zambia will experience drought.That distinction is extremely important.The model is forecasting ENSO, not Zambian rainfall.ENSO is a large-scale climate phenomenon. Translating that signal into a prediction about rainfall in Zambia requires another layer of modelling involving rainfall history, geography, atmospheric conditions, seasonality and potentially soil moisture and temperature.But the ENSO signal is still economically valuable.It gives us something that every risk manager wants:time. <h2>From the Pacific Ocean to a Zambian maize field</h2>Why should Zambia care about a temperature anomaly in the Pacific Ocean?Because climate does not respect economic borders.The 2023/24 El Niño episode demonstrated this brutally.Zambia experienced one of its most severe droughts in decades. Agricultural production was heavily affected, particularly maize. The consequences subsequently moved beyond farms and into markets, households and public finances.The chain is familiar:Climate shock → agricultural shock → food-supply shock → price shock → household-income shock → fiscal pressure.That is the real economic significance of El Niño.It is not simply a weather story.It is a risk transmission mechanism.When rainfall fails, farmers lose production.When production falls, food availability tightens.When supply tightens, prices rise.When food prices rise, household purchasing power falls.When households struggle, government intervention becomes more important.Suddenly, something that began thousands of kilometres away in the Pacific becomes an issue for the Bank of Zambia, the Ministry of Agriculture, grain traders, banks, insurers and ordinary households. <h2>Perhaps we are asking the wrong question</h2>The conventional question is:“Will El Niño cause drought?”A better question is:“What can we do if the probability of an El Niño event becomes sufficiently high?”That changes everything.A farmer might reconsider crop choices.An agricultural lender might reconsider portfolio exposure.An insurer might reassess agricultural risk.A grain trader might review inventory positions.Government might consider strategic grain stocks earlier.Irrigation investments might become more urgent.Water utilities might stress-test supply.Development agencies might bring forward resilience programmes.And financial institutions could begin pricing climate risk into agricultural lending.The forecast becomes valuable not because it tells us exactly what will happen, but because it allows decisions to be made before the consequences arrive. <h2>The case for Njala Insurance</h2>This is where the idea of Njala Insurance becomes particularly interesting.The concept is built around a simple proposition: Zambia should explore agricultural insurance mechanisms that are designed around the realities of smallholder farmers and the risks they actually face.Traditional insurance asks the farmer to pay a monetary premium.But for a farmer whose biggest asset is the harvest itself, there may be another way to think about the transaction.What if insurance could be connected more directly to expected agricultural output?What if farmers could contribute a portion of their harvest or expected production into a risk-pooling mechanism?The ancient Joseph story provides the philosophical metaphor.Store something during abundance because scarcity is possible.Modern statistics provide the other half of the idea.We now have increasingly sophisticated ways of identifying when the probability of climate disruption is rising.The combination of the two is powerful:Ancient wisdom tells us to prepare.Modern statistics tell us when the risk may be rising.Financial innovation determines how we can act on that information. <h2>We should not confuse prediction with prophecy</h2>There is also a danger in all of this.A 94.1% probability can sound like certainty.It is not.A statistical forecast is not prophecy.It is a statement about probability conditional on the data, model structure and assumptions used.The model could be wrong.The atmosphere could behave differently.ENSO could transition unexpectedly.And even if El Niño develops exactly as anticipated, Zambia's rainfall response will not necessarily mirror the previous event.This is why good forecasting should never produce complacency.It should produce preparedness.The objective is not to predict the future perfectly.The objective is to reduce the cost of being surprised. <h2>The ocean is giving us a warning before the fields do</h2>There is something profound about the fact that the earliest signal of a potential agricultural crisis may come from an ocean thousands of kilometres away.A fisherman sees the ocean changing.A meteorologist sees atmospheric patterns.A statistician sees a distribution shifting.A machine-learning model sees probabilities.A farmer eventually sees the consequences in the field.These are not separate events.They are different points along the same system.The opportunity for Zambia is to connect them.We should be building systems in which climate information flows into agricultural planning, financial risk management, insurance, food-security policy and investment decisions.Because by the time the farmer sees the drought, it may already be too late to prepare. <h2>The next Pharaoh moment</h2>The emerging 2026 El Niño signal should therefore not be treated as a reason for panic.It should be treated as an opportunity to test whether Zambia has learned the lesson of 2023/24.If the models are wrong, preparation will have cost something.If the models are right, preparation could save considerably more.That is the economics of uncertainty.We do not need certainty before acting.We need risk-adjusted decisions.Perhaps this is ultimately what the story of Pharaoh and Joseph was trying to teach us.The wisdom was not in knowing exactly what the future would look like.The wisdom was in recognising that good years and bad years could coexist within the same system — and that a society capable of looking ahead could use the former to prepare for the latter.The Pacific Ocean has begun sending another signal.The latest statistical evidence suggests that El Niño is overwhelmingly the most likely ENSO state for September 2026.Zambia should listen.Not because the future is certain.But because uncertainty is precisely why preparation matters.And sometimes, the difference between a crisis and a manageable shock is not whether we knew what was coming.It is whether we were willing to act when the probability became high enough.

El Niño Is Coming Again: What the Pacific Ocean May Be Telling Zambia

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