Zambia’s first president, Kenneth Kaunda, who died in June, was an avid believer in African socialism and used the independent Zambian state to help the nation recover from nearly 80 years of British colonial rule. However, many of his policies were reversed by neoliberal economic reforms after he was overthrown in 1991.
Zambian opposition politician Hakainde Hichilema won an upset victory in Monday’s presidential elections, defeating incumbent President Edgar Lungu by almost 1 million votes out of about 5 million cast. Hichilema is one of the country’s richest men and is likely to steer the country on a course closer to the West, with investors already making plans for after the country’s expected International Monetary Fund (IMF) bailout.
In the Monday vote, 59-year-old Hichilema of the United Party for National Development (UPND) won 60% of the vote, or 2.8 million ballots, triumphing over 64-year-old Lungu’s 1.8 million votes. Because of the wide margin, there was no need for a runoff election, and while Lungu initially claimed there had been irregularities in the election, he soon conceded defeat and said he would “comply with the constitutional provisions for a peaceful transfer of power.”
According to Al Jazeera, Hichilema benefited from a large “protest vote” over Lungu’s perceived poor handling of the COVID-19 pandemic and the economic downturn the pandemic has brought. At 70%, turnout was its highest since multiparty elections began in 1991.
Copper and Debt
Zambia, according to the Tricontinental Institute for Social Research, “is a rich country with a poor population.” With a poverty rate of between 40 and 60%, the country also holds enormous mineral wealth, making it the second-largest copper producer in Africa after the Democratic Republic of the Congo.
However, much of that wealth flows out of the country. According to data collected by the Observatory of Economic Complexity, in 2019, 53.4% of Zambia’s exports were raw copper and another 19% were refined copper, and 28.7% of its exports went to Switzerland, while another 15.9% went to China.
In addition, the country is heavily indebted, including $2.2 billion owed to China, $3 billion in Eurobonds, $3.5 billion in bilateral debt, $2.1 billion to multilaterals and $2.9 billion to commercial lenders. Despite being a minority of its debt, Lusaka’s debt to China has been extensively attacked by the Western press as proof of Beijing’s “neocolonialism” in Africa and even called “debt slavery.” In fact, Zambia owes more to the European Union than to China.
Looming IMF Deal
However, with the victory of a Western-oriented businessman, investors are salivating at the possibility of such a deal in the near future.
“Post-inauguration, an IMF program is on the cards for Zambia,” Gregory Smith, emerging markets strategist at M&G Investments in London, told Bloomberg on Tuesday. “Once an economic plan is in place the IMF negotiations can finally step up a gear. An IMF program is feasible ahead of the April 2022 meetings.”
“An IMF bailout would facilitate the restructuring of Zambia’s debt and increase the likelihood of it being accepted in other debt assistance programs. Zambia’s commitment to reforming its public finances will be judged on the outcome of the negotiations with the IMF,” Montana added.
Zambian analyst Neo Simutanyi told DW that Hichilema “will be in a better position to negotiate terms with international creditors and investors in mining operations and the economy,” adding that “until now, there has been a lack of confidence in the economy.”
In other words, the Brussels-based lender has prepared the ground for Lusaka to accept austerity measures and limit its control over banking and investment as its economic situation worsens.
Sourse: sputniknews.com
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