Who Wins from Zambia’s Proposed 2027 Budget?
By Prof. Lubinda Haabazoka
The clearest winners from Zambia’s proposed K284.8 billion budget are households receiving Social Cash Transfers. The Government proposes K10.4 billion for the programme, expanding coverage from 1.5 million households in the 2026 budget to more than 1.6 million in 2027.
For millions of other Zambians, the gains will depend on the public services they use, the markets they sell into and the taxes they pay. A farmer may benefit from subsidised inputs and a better feeder road while paying more to move money by phone. A parent may save on school meals while paying a little more for goods subject to VAT. The distribution of gains matters as much as the size of the budget.
Families using public schools and clinics
Education and health together account for K68.5 billion, about 24 percent of proposed expenditure. Within education, the allocation for school feeding rises from K523 million to K1 billion, an increase of about 91 percent. A school meal can reduce the daily cost of sending a child to class. Where schools procure locally, it can also create a dependable market for nearby farmers. A further K2.8 billion is set aside for school operations and K1.9 billion for tertiary loans and scholarships.
In health, K6.4 billion is earmarked for drugs and medical supplies. The gain for a patient comes when a prescription is filled at a public facility and the family avoids paying for the same medicine at a private pharmacy. Retired public servants awaiting pension payments could also benefit from the K5.2 billion allocation intended to shorten the wait.
Smallholders, local manufacturers and tourism operators
Agriculture, fisheries and livestock are allocated K22.7 billion, including K9.1 billion for the Farmer Input Support Programme. Smallholders who receive inputs in time for planting stand to gain directly. The K18.1 billion road allocation, which includes feeder and intra-district roads, can make a difference after harvest. A road that remains passable in the rainy season gives farmers more choice over where to sell and can reduce the cost of moving produce.
Selected manufacturers also gain room to compete. The proposed customs duty on imported ceramic tiles rises from 25 to 40 percent, while local manufacturers of sanitary products would receive a customs duty suspension and VAT exemption on qualifying imported raw materials. One measure raises the cost of competing imports. The other lowers the cost of domestic production. For households buying tiles, stronger protection could mean higher prices if local output expands too slowly to meet demand.
Tourism operators stand to benefit from proposed duty suspensions on safari vehicles, hospitality equipment and communications infrastructure. Artisanal and small-scale gold miners would see their mineral royalty fall from 6 to 3 percent when they sell to government-approved aggregators. Whether that brings more gold into formal channels will depend on how accessible those buyers are and what prices they offer.
Communities served by newly created constituencies are among the clearest local beneficiaries. The total Constituency Development Fund allocation rises from K6.2 billion to about K9 billion, with K40 million per constituency. The increase extends funding across more constituencies. What residents gain will depend on which projects councils complete and put into service.
Who pays for the gains?
The proposed increase in standard VAT from 16 to 16.5 percent spreads part of the cost across consumers. A taxable purchase priced at K1,000 before VAT would cost K1,165 instead of K1,160 if the seller passes through the full increase. The proposed increase in the mobile money levy across all bands would also reach people outside the formal payroll. Households that receive no cash transfer and rely heavily on mobile money could therefore face higher costs even when their PAYE bill stays the same.
Higher earners and mining shareholders face more targeted measures. The proposed 39.5 percent PAYE rate would apply only to the portion of monthly income above K37,000. Withholding tax on dividends paid by mining companies would rise from zero to 15 percent. The Treasury estimates that the proposed revenue measures would raise a net K10.8 billion.
The wider economic gain would come from bringing the fiscal deficit down from a projected 5.9 percent of GDP in 2026 to the 3 percent target for 2027. If that eases pressure on domestic credit markets, businesses could find it easier to finance expansion. But with K67.6 billion budgeted for debt service, nearly 24 percent of total expenditure, the Government has limited room to absorb a revenue shortfall or another spending shock.
My assessment is that the budget makes its strongest case where it expands cash transfers, nearly doubles funding for school meals and helps smallholders reach markets. By the end of 2027, the fairest test will be whether families received their transfers on time, clinics had medicines when patients needed them, and farmers could get their produce to market at a lower cost. Those are gains households can weigh against the higher prices and transaction charges they may face.