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Zambia is a middle-income country located in the centre of southern Africa. It shares it borders with seven other southern African countries – Malawi, Angola, Tanzania, Zimbabwe, Botswana, Namibia and the Democratic Republic of Congo. Zambia has an urbanisation rate of 4.2% and this is expected to continue rising. The landlocked country has experienced rapid economic growth over the last decade and is Africa’s second largest copper producer. However, dependency on copper leaves the economy vulnerable to commodity price shocks.
Access to finance in Zambia is low, although mobile money services are improving financial inclusion measures. Zambia’s financial sector is made up of 18 banks and 129 institutions in the non-banking financial sector (including building societies and microfinance institutions).
Mortgage interest rates range between 20.75% and 28.50%. Mortgages are not a very strong product in the Zambian market. A lack of funding options for banks also make mortgage lending a difficult product. Unsecured home improvement and incremental home construction loans are a much stronger product. Despite high interest rates, these loans are smaller in size and the shorter tenor makes them more manageable for borrowers and lenders.
Zambia’s low average household incomes and high mortgage lending rates severely affect housing affordability. It is therefore unsurprising that approximately 60 percent of the urban population resort to renting. At the top end of the residential market, rentals have been in decline due to an increase in the supply of units for high income housing consumers.
Government investment in housing programmes have largely targeted public sector employees. Public-private partnerships have been at the core of this housing delivery.
Zambia has also attracted significant property investment from international investors. This has been less evident in the residential property market, which represents the largest part of the Zambian market.
All land in Zambia is government owned, and land titles are generally attainable on 99-year land leases. Buying land is more common than buying a complete house in Zambia. Recently, there have been concerns around a proposal to revise the Lands Act and only give 25-year land leases to international investors.
In the Zambian market, investments in apartment buildings may provide attractive returns for many years. In addition, strong demand for serviced plots, housing microfinance through mobile money platforms and the provision of incremental housing finance are all opportunities in housing development and housing finance more broadly.
Find out more information on the housing finance sector of Zambia, including key stakeholders, important policies and housing affordability:
- Access to Finance
- Housing Supply
- Property Markets
- Policy and Regulation
- Availability of data on housing finance
- Additional sources
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.Download yearbook
Zambia is lower middle income country in Southern Africa with eight neighbours and excellent water, agricultural and mineral resources. It is historically known as one of the world’s largest copper producers. In 1969 it was producing 12 percent of the world’s copper; today this is down to three percent. Zambia is ranked highly in Africa in ease of doing business and real estate market transparency and is generally seen as a business-friendly country. It has a population of 18.23 million, a gross domestic product (GDP) per capita of Z$9 779 (US$1 539) and Purchasing Power Parity (PPP) GDP of Z$54 185 (US$4 216) per capita. The country has one of the highest urbanisation rates in Africa with 43 percent of households living in urban areas as of 2015. The urban population growth rate is four percent per annum and the general population growth is 2.9 percent per annum.
The strong urbanisation and population growth drive a high level of housing construction and more than 150 000 households are formed every year. Most of these new homes are self-built, free-standing houses, creating significant urban sprawl. The geographic coverage of Lusaka has been growing 10 percent a year over the last 10 years. Economic activity is concentrated in the Lusaka and Copperbelt provinces.
Zambia is facing a number of macroeconomic challenges. While inflation remains relatively stable, interest rates of close to 30 percent are putting a significant strain on economic activity. Inflation in August 2019 was running at 9.3 percent, above the Bank of Zambia’s (BOZ) six percent to eight percent target. With government five-year bonds trading at a yield of 32 percent, private investment has been crowded out by the government’s funding requirements. In addition, a significant reduction in foreign reserves from 2.9 to 1.6 months’ import cover is making further currency depreciation and an increase in inflation likely. In May 2019, the BOZ increased the policy interest rate for the first time since November 2015, to 10.25 percent, up from 9.75 percent.
The Zambian US Doller denominated Euro-bonds are trading at yields of over 22 percent, pointing to reduced investor confidence in Zambia. No other country that is not in default has a yield as high. Zambia has also had multiple credit downgrades by rating agencies over the last year. The main drivers of this uncertainty are the government’s debt-to-GDP ratio of more than 73 percent at the end of 2018 and continued government deficits of more than seven percent per annum for the foreseeable future. Over the last 12 months, the kwacha has also depreciated by more than 30 percent against the US Dollar.
In 2018, Zambia’s GDP growth rate was 3.7 percent per annum, and it was 4.1 percent in 2017. The growth rate contracted slightly towards the end of the year due to falling consumer and business confidence. Credit growth was also subdued. Zambia’s economy in 2018 was buoyed by a strong performance in the mining, manufacturing and construction sectors. Unfortunately, 2019 has been a tougher year as the lower-than-expected rainfalls have resulted in a failed harvest in Southern Zambia as well as low water levels for hydro-power production, leading to blackouts starting in June 2019. Consequently, the International Monetary Fund (IMF) recently revised Zambia’s growth forecast for 2019 down to two percent.
The high interest rates have made mortgages much less affordable. The number of outstanding mortgages has reduced by 40 percent over the past three years. However, there has been a 75 percent increase in unsecured loans for home improvement and incremental home construction (HILs) over the same period, driven to a large extent by microloans granted over mobile networks.
 Knoema (2019). GDP per Capita by Country Statistics from the World Bank 1960-2019. https://knoema.com/jesoqmb/gdp-per-capita-by-country-statistics-from-the-world-bank-1960-2017?country=Zambia (Accessed 29 August 2019).
 Central Statistical Office (2016). 2015 Living Conditions Monitoring Survey Report. https://www.zamstats.gov.zm/index.php/publications/category/27-living-conditions (Accessed 30 August 2019). Pg. 30.
 Calculated as the difference in number of households between 2015 Living Conditions Monitoring Survey Report and 2017 Labour Force Survey.
 Lilayi Development Company (2019). Lilayi City Marketing brochure. Pg. 5. Unpublished.
 Wallace, P. (2019). Zambia Bonds Reach Another Grim Milestone. 31 May 2019. Bloomberg. https://www.zambiawatchdog.com/zambia-bonds-reach-another-grim-milestone/ (Accessed 11 September 2019).
 Bloomberg (2019). Warning Signs for Zambia as Eurobond curve becomes more inverted. 24 April 2019. Lusaka Times.
 Phiri, C. (2019). IMF raises flag over Zambia’s Debt Contraction. 2 May 2019. Zambia Reports.
 Trading Economics (2019). Zambia Government Budget. https://tradingeconomics.com/zambia/government-budget (Accessed 11 September 2019).
 Fi, F. (2019) Kwacha loses 31.4% in last 12 months; Bloomberg. Financial Insight Zambia Limited.14 April 2019.
 Lusaka Times (2019). IMF cuts Zambia’s GDP Forecast from 2.3% to 2%. 3 August 2019. Lusaka Times.
 Bank of Zambia (2019). Credit Market Monitoring Report 2018 (Excel sheet). https://www.boz.zm/credit-market-monitoring-reports.htm (Accessed 23 August 2019). UARE calculations.
Access to Finance
The ability to access finance in Zambia is still low but mobile money is increasing the coverage. In 2015, 59 percent of the population were financially included. There are 18 banks in Zambia of which nine offer mortgages. The 18 banks have 372 branches; of these banks, eight are subsidiaries of foreign banks, seven are privately Zambian-owned and three are partially government-owned. Foreign banks control about 70 percent of the market.
The assets of the 18 banks in Zambia are generally low risk and are constituted as follows: 32 percent are loans, 24.9 percent are investments in government securities and 23.8 percent are loans to financial institutions abroad. Banking assets grew by 14.5 percent to Z$82 billion (US$6 380 million) during 2018. Seventy-five percent of the funding for the banks comes from customer deposits and 12 percent from equity. The non-banking financial sector covers 129 institutions; of these, three are building societies, and 35 are microfinance institutions as of the end of 2018. Pan-African Building Society was taken over by BOZ in July 2019, leaving only two building societies operating. The building societies had assets of Z$1 230 million (US$96 million) at the end of 2018, of which approximately 57 percent were loans; of these, 21.3 percent were non-performing loans (NPLs). The building societies represent about 2.5 percent of the loan disbursement by value in Zambia.
Consumer lending microfinance institutions (MFIs) performed well in 2018 and grew assets by 33 percent to Z$5 187 million (US$404 million) of which loans were 88.3 percent. Even though their asset base is largely unsecured, the MFIs only had approximately 10 percent NPLs and a return on assets of 14.7 percent a year.
The number of mobile money transactions increased by 76 percent in 2018 to over 300 million transactions, with the value of those transactions increasing by 187 percent to Z$22.5 billion (US$1 751 million). According to BOZ, this increase in mobile money transactions was partly driven by second-generation products like microloans developed collaboratively by mobile operators, microfinance and banking institutions. Consequently, the percentage of unsecured loans as a percentage of value has grown from 29.6 percent in 2016 to 46.9 percent in 2018. Most of this has gone to households as the value of loans to households in 2018 was 42.5 percent of the total, up from 26.5 percent in 2016. As of June 2019, the average interest on personal loans was 29 percent.
The number of credit files submitted to TransUnion, the Zambian credit bureau, fell by 37 percent to about 3.5 million, while credit reports searched fell by 48 percent to about 309 000 during 2017. This is likely a result of the credit providers not living up to the requirement to submit and search credit files and the resultant lapse in underwriting standards. The credit bureau now covers about 3.3 million records and 1.6 million legal persons. The percentage of household loans that were credit approved stayed constant from 2016 to 2018 at 43 percent.
Fifty-one percent of Zambian loans were underwritten based on loan payments being deducted directly from payroll by the borrower’s employer, while another 36 percent of loans required payments to be automatically deducted from the borrower’s salary-receiving bank account. This means that potential lenders generally require a high level of security and that the approximately two-thirds of the Zambian workforce employed in the informal economy are unlikely to be able to access loans of any meaningful size.
The level of NPLs in the Zambian banking industry was 11.8 percent at the end of 2018. Households are among the lowest at only 6.3 percent, thus seemingly still an attractive segment for lenders. Mortgages had a high NPL ration at 14.9 percent at the end of 2018, a less attractive product for the lenders. As at the end of 2018 there were 8 000 mortgages outstanding in Zambia, covering both commercial and home loans. The value of the total mortgage book was Z$8.7 billion (US$677 million), or 17.8 percent of the total bank loan book. Of the mortgages disbursed in the years 2016 to 2018, approximately 38 percent by number (3 543) were to individuals while by value they were approximately 10 percent. The average home mortgage in 2018 was Z$323 000 (US$25 132) and 1 154 home mortgages were issued. With the high interest rates and only about 200 000 land titles in Zambia (and a significant portion of those land titles being commercial land), it is not surprising that mortgages are not a strong product. Other factors making mortgages a difficult product include that the banks are mostly funded by short-term deposits, which makes it difficult to match assets and liabilities.
From the beginning of 2016 to the end of 2018 the number of mortgages outstanding in Zambia reduced by 40 percent. The value of mortgages disbursed to households increased from Z$220 million (US$17.2 million) in 2016 to Z$372 million (US$28.9 million) in 2018; the number of mortgages issued over the comparable period only grew to five percent, from 1 104 to 1 154.  Mortgage interest rates in June 2019 ranged from 20.75 percent to 28.50 percent with an average of 23.7 percent. Mortgage tenors are generally 15 to 20 years with loan length influenced by the borrower’s time to pensionable age, among others. Loan-to-value ratios are generally in the 75 percent to 80 percent range but can go as high as 90 percent. Several upfront statutory and banking fees add substantially to the cost.
Unsecured HILs are a much stronger product in Zambia than mortgage loans; 27 300 HILs were issued in 2018, up from 17 800 in 2016. From a value perspective, these loans have seen a 385 percent increase over the last two years, from Z$536 million (US$41.7 million) in the first quarter of 2016 to Z$2 067 million (US$160.8 million) in the fourth quarter of 2018. This is clearly a better loan for both lender and borrower due not only to a 2018 average size of Z$27 000 (US$2 101) and easier, low-cost underwriting, but also because the high interest rates married to a shorter tenor make the loan more manageable for the borrower. The average HIL size remained unchanged from 2016 to 2018. Fifty-two percent of the banking sector’s unsecured loans by value go to “other purposes” of which a substantial portion are home construction-related.
 FSD Zambia (2016), FinScope Survey 2015. https://www.fsdzambia.org/publication/finscope-2015/ (Accessed 11 September 2019). Pg. 15.
 Bank of Zambia (2019). Credit Market Monitoring Report 2018 (Excel sheet).
 Bank of Zambia (2019). BOZ Notice Interest Rates & Bank Charges as at June, 2019 (Excel sheet).
 Bank of Zambia (2019). Bank of Zambia 2018 Annual Report. Pg. 64.
 Bank of Zambia (2019). Credit Market Monitoring Report 2018 (Excel sheet).
 Bank of Zambia (2019). BOZ Notice Interest Rates & Bank Charges as at June, 2019 (Excel sheet).
Creating affordable homes remains a problem in Zambia, primarily due to the low average household incomes of Z$1 801 (US$140) a month, which is exacerbated by the high interest rates. Urban household incomes at Z$3 152 (US$245) a month were almost three times higher than rural ones at Z$810 (US$63). In addition, the top 10 percent of Zambian households earn 56 percent of the income. In urban areas, this is even more pronounced as the top 10 percent of the population have 66 percent of the income. Consequently, segments of the Zambian population should be able to afford newly built, professionally developed homes.
The high interest rates diminish housing affordability. The cheapest newly built house by a professional developer costs Z$950 000 (US$73 918). Assuming a 20-year mortgage with an interest rate of 24 percent and a 20 percent down payment, a house would cost Z$15 332 (US$1 193) a month in mortgage payments. If one third of household income is spent on mortgage payments, a monthly income of Z$45 000 (US$3 501) is required, which is well out of the affordability range of most Zambian households. On the other hand, rent for a Z$950 000 home would be Z$7 500 (US$584) a month, that is about 50 percent of the cost of owning. This could possibly correlate to the fact that approximately 60 percent of urban households in Zambia rent and 40 percent own the homes they live in. Urban households average approximately 30 percent of their household income on housing; with lower cost and higher cost households spending 27 percent and 36 percent, respectively, of their income on housing.
When households build their own homes, they will often do so on a highly incremental basis, initially often buying the land on a three to five year payment plan and then building the house for the following five to 10 years as and when money is available. Financing can be from short-term housing construction loans, family help, or other cash events. The lack of title and incremental nature of construction is the likely reason why lenders are seeing a high level of unsecured housing construction loans and a low level of mortgages. There is also little doubt that individuals can build cheaper than professional developers for several reasons, including lower land costs. It is more palatable for individuals to build on land without full title. Individuals also use cheaper contractors from the informal economy.
The converse of the rich urban population is a high level of poverty, especially in the rural areas. Rural poverty was estimated at 76.6 percent while urban poverty was estimated at 23.4 percent with an overall poverty level of 54.4 percent. The poorer segments of the population are not targetable by professional developers or mortgage providers.
 Central Statistical Office (2016). 2015 Living Conditions Monitoring Survey Report. https://www.zamstats.gov.zm/index.php/publications/category/27-living-conditions (Accessed 30 August 2019).
 Central Statistical Office (2016). 2015 Living Conditions Monitoring Survey Report. Pg. 16.
In 2017 there were 3.382 million Zambian households, up from 3.015 million in 2015. In Lusaka and the Copperbelt provinces 87 percent and 83 percent of households, respectively, were in urban areas; the average across Zambia was 43 percent. The average household size was 4.9 for both rural and urban areas.
In 2015, 53.5 percent of Zambian households were either traditional huts or improved traditional huts; in rural areas this number was 82.8 percent. Seventy-eight percent of households have access to improved water sources (89.2 percent in urban areas). And 77 percent of households use a pit latrine as a toilet facility (own or shared) (64.9 percent in the urban areas). Charcoal is still the most common source of energy in urban households at 59.1 percent.
The top end of the residential rental market has seen significant rental reductions over the last year. The relatively large increase in supply of units at this end of the market over the last decade has translated into lower yields and placed downward pressure on selling prices. The middle and lower ends of the rental market are keeping stable and rents are likely to increase in the lower end of the market.
The institutional investor community in Zambia was historically large investors in for-rent residential property, whether apartment buildings or free-standing houses. In Zambia, the pension fund Industry is still at nascent stage as it covers only 109 000 members out of a total population of 18.23 million. The combined pension fund assets, excluding the National Pension Scheme Authority (NAPSA) and Workers’ Compensation Fund Control Board (WCFCB), was Z$7.823 billion (US$608.7 million) at the end of2017, of which property investments were Z$1.499 billion (US$116.6 million) equal to 19.2 percent of assets. NAPSA’s assets are not reported but are estimated to be above Z$51.4 billion (US$4 billion). WCFCB had assets of Z$1.7 billion (U$132.3 million). While pension assets increased by 17.5 percent in 2017, the increase in property was only 3.4 percent, indicating almost no property investments were undertaken in the year. Zambian institutional investors have generally not been active in housing development in recent years but have significant exposure to legacy portfolios of apartment buildings and houses for rental.
There have been some large housing investment programmes for public sector employees, especially the military. This includes a 5 000-home development programme for the Zambian Air Force in Kabwe and the Twin Palms area of Lusaka, among others, and a 2 000-home development in Luapula for the army. Except for these, the government seemingly sees its role as creating the enabling infrastructure rather than taking a more direct role in housing development for the general public. One notable exception is the public-private partnership between the government and Sun-Share for the 3 000 home Kingsland development in the Twin Palms suburb of Lusaka, with the government’s input being changing the zoning of an existing forest reserve to housing.
 Central Statistical Office (2018). Zambia Labour Force Survey 2017. https://www.zamstats.gov.zm/index.php/publications/category/28-labour (Accessed 29 August 2019), Pg. 23.
 Central Statistical Office (2016). 2015 Living Conditions Monitoring Survey Report.
 Confidential interview with Board Members, National Pensions Authority, Undertaken during 2018, Lusaka.
 Interview with Michelo Silungwe, Workers Compensation Fund Board, September 2018, Ndola.
Zambia is rated as the fourth most transparent property market in Africa. Zambia has attracted more than Z$8 billion (US$1.4 billion) in property investment and development since 2014, about half of which has been from international investors. However, very little of this has gone into residential property.
The Zambian residential market undoubtedly represents the largest part of the Zambian property market. Most housing ownership is informal as only approximately 200 000 land titles had been issued in Zambia by 2018. Of these land titles, half are estimated to relate to commercial property. It should be noted that the Minister of Lands has said that 60 000 new land titles were issued in the last quarter of 2018 alone. Only six percent of land in Zambia is on title with the remaining 94 percent under the control of chiefs or zoned as national parks. All land in Zambia is owned by the government and what is defined as land title is a 99-year land lease with the government; this is freely transferable. Getting a mortgage on a land title is reasonably easy.
In addition to trading in titled units, the property market also trades units in semi-formal ownership and even on customary land. Buying land is common, but buying a completed house is relatively rare. There are more than 175 registered estate agents in Zambia. Getting land title to a plot that is not in the cadastral system can take as much as 10 years, but is often worth it due to lower acquisition costs. A serviced plot can cost from Z$15 000 (US$1 167) to more than Z$1 million (US$77 808) based on size and location, while unregistered plots can often be had for free. Completed homes can be bought for as low as Z$350 000 (US$27 233) and up to Z$20 million (US$1 556 163).
Land titles are issued and transferred by the Ministry of Lands (MoL) based in Lusaka and in the MoL’s provincial offices. The country does not have a digital register. The cost of transferring a property, including property transfer tax, averages 9.7 percent and takes 45 days in a best-case scenario. The World Bank rates Zambia’s quality of land administration as 7 on a scale of 0 to 30, below the Sub-Saharan Africa average score of 8.8; consequently, Zambia is only ranked 150 out of 190 countries in quality of land administration.
 Urban Africa (2019). Zambia Property Investment Database. (Accessed 30 August 2019). Unpublished.
 Tembo, E., Minango, J. and Sommerville,M. (2018). Zambia’s National Land Titling Programme – challenges and opportunities. Land Links. https://www.land-links.org/wp-content/uploads/2018/03/Session-06-05-Tembo-153_paper.pdf (Accessed 11 September 2019). Pg. 2.
 Lusaka Times (2019). A title deed application is supposed to be processed within two weeks – Kapata. Lusaka Times.
 Land Links (2017). Country Profiles Zambia. https://www.land-links.org/country-profile/zambia/ (Accessed 25 August 2019).
 Zambia Institute of Estate Agents (2019). Updated List of ZIEA Paid-Up Members. http://ziea.org/images/2019-Updated-List-of-ZIEA-Paid-Up-Members.pdf (Accessed 11 September 2019).
 World Bank (2019). Doing Business 2019 Training for Reform Economy Profile Zambia. Pg. 21.
Policy and Regulation
The government has over implemented additional policies and laws over the past year to support the banking and housing finance industries. First, Zambia made enforcing contracts easier by making judgments rendered in commercial matters at the Appellate and Supreme Court levels available to the general public online. Second, the Banking and Financial Services Act (BFSA) No. 7 of 2017 became effective in 2018. Revisions to the BFSA include enhanced consumer protection and corporate governance provisions. Consequently, the BOZ has been empowered to adequately enforce consumer protection.
Of more concern to investors were the proposed substantial revisions mooted to the Lands Act which included giving only 25-year land leases to international investors. Substantial pushback was received from most sectors of society on this Bill during 2018 and the Bill has made little progress since.
 World Bank (2019). Doing Business 2019 Training for Reform Economy. Pg. 151.
Opportunities in the for-sale housing and mortgage markets in Zambia are limited, although there might be instances of demand in the Z$400 000-Z$600 000 (US$31 123-US$46 685) range.
Three major opportunities are open in the wider housing development and housing finance space. For local institutional investors, multi-family rental housing (i.e., apartment buildings), whether for families or students, will provide attractive returns for many years. Rental collections remain a challenge in the existing portfolio but lessons from other markets can be applied to handle these issues. Demand for serviced plots is strong, as illustrated by the numerous successful master-planned schemes across Lusaka such as Meanwood, Roma Park, Nkwashi, Chelston, Roan and Lilayi, with more than 30 000 plots having been sold over the last 10 years. Given the strong focus on self-build in Zambia, housing microfinance using mobile money platforms could, for experienced, tech-savvy lenders, be a highly attractive opportunity. Finally, development finance institutions should consider funding smaller projects in incremental housing and back-yard housing as these areas show great promise; once proven, commercial developers will push these products strongly.
International investors worry about the currency depreciation that will dent returns and the potential need for lower rents as the economy weakens. According to the BOZ: “addressing the large fiscal deficits, elevated debt and debt service levels, high domestic arrears and liquidity challenges remains critical for overall macroeconomic stability and economic growth.” However, in the medium and long term, Zambia’s strength in its institutional frameworks and relative ease of doing business will create significant opportunities.
 Interviews with the developers during 2018 and 2019.
 Bank of Zambia (2019). Monetary Policy Committee Statement 21 August 2019.
Availability of data on housing finance
Data on Zambia’s banking and finance sectors is readily available because of the data collected by the BOZ. The 2017 Credit Market Monitoring Report provided data on lending by type, the health of the financial institutions and NPLs, among others. The 2018 Credit Market Monitoring Report will provide updated information on the 2017 report. The 2015 Living Conditions and 2017 Labour Force surveys also provide much relevant data. The next Living Conditions Survey will be undertaken in 2020.
There is currently no information emanating from the Ministry of Lands on land titles and housing transactions. There is also no data on the investments of NAPSA which could be a big driver of housing in Zambia. The Zambia Property Owners Association has been working on a house price index for some time, but the index has yet to be published.
African Development Bank. Country Profile: Republic of Zambia.
Ministry of Finance (2018). 2019 Budget Address by Honourable Margaret D. Mwanakatwe, MP, Minister of Finance, Delivered to the National Assembly on Friday 28th September 2018.
Republic of Zambia (2006). Vision 2030: A Prosperous Middle Income Nation by 2030.
Republic of Zambia – Ministry of Finance (2019). Ministry of Finance Annual Report 2018.
Bank of Zambia www.boz.zm
Zambia Ministry of Finance https://www.mof.gov.zm/
Zambia Central Statistical Office https://www.zamstats.gov.zm
Zambia Data Portal – Central Statistical Office https://zambia.opendataforafrica.org/