Zambia’s debt crisis: How Chinese loans and power shortages crushed small businesses

Zambia’s economic crisis reveals how excessive borrowing, weak financial oversight and environmental disasters can combine to undermine a nation’s development. Chinese financing helped the southern African country expand its infrastructure, but mounting debt and financial difficulties at its state-owned electricity company left the economy vulnerable. When a severe drought triggered widespread power shortages, small businesses, farmers and ordinary households suffered the consequences.

Kanangwa Newlove, an organic farmer outside Lusaka, experienced this crisis firsthand. In October 2025, she watched her vegetables wither under the heat. Without reliable electricity to operate borehole pumps, she struggled to irrigate her crops and preserve the produce she managed to harvest. Her business, once successful, faced the possibility of closure.

Zambia’s economic outlook was relatively strong in the early 2010s. Supported by copper exports and rising international demand, the country recorded average annual economic growth of 7.4% between 2004 and 2014. The government sought foreign financing to build roads, airports, power infrastructure and other development projects.