After polls Lusaka will face huge IMF pressure to restructure the economy

Saturday August 14 2021
Supporters of President Edgar Lungu

Supporters of President Edgar Lungu gather in Lusaka on August 11, 2021, for a virtual closing rally ahead elections. PHOTO | AFP


Zambians went to the polls on Thursday to elect a new president and members of the National Assembly and results were expected by the weekend.

It was a crowded field of 19 candidates vying for the presidency, but the real contest was between President Edgar Lungu and billionaire Hakainde Hichilema.

In the run-up to the polls, political violence marred campaigns and President Lungu authorised a heavy-handed response by ordering Zambian military on the streets. Political analysts billed the Thursday polls as a referendum on the 65-year-old leader’s performance since his rise to power in 2015.

President Lungu, who succeeded the late Michael Sata, served as Justice and Defence minister under the previous administration. He is a lawyer by profession.

Under his stewardship, the southern African country started choking from colossal debt, runaway inflation, corruption, and a weakening currency.

An Afrobarometer Sustainable Development Goals Scorecard for Zambia, released last month, showed that “the country is experiencing worsening poverty, hunger, and economic and ethnic inequalities compared to five years ago.”


President Lungu’s government has also been accused of lacking fiscal discipline at a time when the economy is suffering under the weight of a Covid-19 pandemic.

Zambia’s democratic credentials also took a severe battering with real concerns ahead of the polls that the incumbent might refuse to step down if he loses to his bitter rival.

Steven Chan, a professor of world politics at the University of London, said the developments ahead of the elections such as the debt crisis and the political upheavals will ensure that Zambia remains under the spotlight well beyond the polls.

“The eyes of the world are turning upon Zambia,” Dr Chan wrote on Twitter on Wednesday. “Everyone knows this is a test for both democracy and the future of a country that has curiously never achieved its potential.

“Whatever the result, fair or not, of the election; Zambia will immediately face huge (International Monetary Fund) IMF pressures to restructure its economy.

“Nationwide projects based on debt, the hallmark of the (President) Lungu government, simply means unsustainable debt. Now the piper wants his fee.”

The Zambian crisis first came into the fore in November last year when the country defaulted on a $42.5 million repayment on a Eurobond.

Observers say the Lungu administration spent some of the loans on infrastructure that could soon turn into white elephants.

On the eve of the polls, President Lungu commissioned the Simon Mwansa Kapwepwe International Airport in the country’s second largest city of Ndola and the commercial hub of its main copper producing region.

The massive project cost $400 million and was financed through a government-to-government loan from China’s Export-Import Bank.

Aviation Industry Cooperation of China, which constructed the airport, said it has a 3.5 kilometre runway and the terminal could handle as many as a million passengers a year.

President Lungu’s government ploughed ahead with the project despite a drop in the price of copper, Zambia’s main export, and the devastating impact of Covid-19 pandemic on the economy.

Zambia’s external debt to gross domestic product ratio now exceeds 100 percent and the country is now defaulting on repayments including to China.

The IMF has been mum about Zambia’s pleas for debt relief and observers expect the lender to press for austerity measures after the polls a condition for new loans.

Since taking over power, President Lungu saw Zambia’s economic growth slowing to about three percent.

Asian country

The country’s economy has been squeezed by an avalanche of Chinese debt and at some point there were fears that the Asian country will take over the power utility, Zambia Electric Power Corporation (Zesco).

The controversy sparked xenophobic sentiments against Chinese nationals in the southern African country.

Lusaka’s debt to the Chinese government rose to more than $3 billion. Zambia’s debt under President Lungu tripled to $19 billion.

“The country’s resources and its future are now mortgaged to international creditors,” said Ringson Chikohomero from the Institute for Security Studies in South Africa.

“Compounding matters is the government’s spending indiscipline and tight squeeze on the social development budget.

“While the mining sector has performed well against increased demand for copper, the administration seems to have failed to tap into this boom.

“Instead, it has tried to increase its revenue by introducing a raft of taxes in the mining sector.

“As a result, Zambia now has one of the highest mining taxes in the world.”

President Lungu’s administration has also been pressing ahead with controversial moves to “nationalise” strategic mines, which analysts say would damage the country’s image and deter new investments.

A dispute with multinational corporation Konkola is raging after the government tried to take over its mines.

The government is also locked in a bitter dispute with Glencore, one of the largest investors in Zambia’s mining sector.

“These ill-advised decisions damage the country’s reputation as a preferred investment destination, strangle the flow of much-needed revenue and add to job and livelihood losses, consigning more Zambians to poverty,” Mr Chikohomero said.

It is not only on the economic front that President Lungu’s performance has caused discomfort.

On the eve of the polls, Western countries began expressing in public their fears that Zambia, long considered a beacon of democracy in Africa, was veering off track.

The United State embassy in Lusaka made a subtle warning against the Zambian leaders that if the August 12 polls do not meet the democratic test, they could be sanctioned.

“When these efforts to support democracy do not work and fundamental human rights and democratic freedoms are violated, the United States can and does apply visa restrictions, travel bans and financial sanctions,” the US embassy charge d’affaires David Young said.

“We apply these measures because we are serious about our commitment to human rights and democratic principles.

“We will hold accountable any individuals, who promote violence, undermine electoral processes, engage in fraudulent or corrupt behaviour, or otherwise violate democratic rights and the foundations of free elections.”

Lynsey Chutel, in a brief to Foreign Policy, argued on Tuesday the polls could be serious test for Zambia’s stability.

“For decades, Zambia was celebrated as a bulwark of democracy in southern Africa,” she wrote.

“Under independence hero Kenneth Kaunda, the country played a key role in the region’s liberation movements and used its copper resources to build a stable state.”