Zam­bian econ­omy on slip­pery slope

In the face of spi­ralling debt, the Pa­tri­otic Front will strug­gle to take the next elec­tion

Mail & Guardian - - Africa - Ni­cole Beardsworth

On Oc­to­ber 18, Zam­bia will mark its third an­nual Na­tional Day of Prayer, Fast­ing, Re­pen­tance and Rec­on­cil­i­a­tion. But as the coun­try is rocked by ris­ing fuel prices, a rapidly de­pre­ci­at­ing cur­rency and an ap­par­ent for­eign aid cri­sis, it’s clear that it will take more than prayers to ad­dress the coun­try’s con­cerns.

A decade ago, Zam­bia was largely debt-free. The coun­try’s debt bur­den stood at $1.9-bil­lion when the rul­ing Pa­tri­otic Front took power in 2011, but within seven years it has bal­looned to a re­ported $9.4-bil­lion — though ex­perts fear that more un­re­ported debt has al­ready ac­crued. The In­ter­na­tional Mon­e­tary Fund (IMF) and in­ter­na­tional mar­kets now con­sider Zam­bia at high risk of debt distress.

The kwacha has de­pre­ci­ated by 20% so far this year, a plunge matched only by the cur­ren­cies of Turkey, An­gola and Ar­gentina.

Reck­less bor­row­ing scup­pered a $1.3-bil­lion res­cue pack­age from the IMF, which sug­gested that a bailout would be hard to jus­tify un­der the state’s spend­ing con­di­tions.

Since Edgar Lungu’s as­cen­dance to pres­i­dent in Jan­uary 2015, cor­rup­tion has be­come in­creas­ingly ap­par­ent in pub­lic life. The rul­ing Pa­tri­otic Front has gone on a whirl­wind in­fra­struc­ture spend­ing spree, and the gov­ern­ment has pro­cured goods and ser­vices at vastly in­flated prices.

Amid a grow­ing list of scan­dals was the award­ing of a ten­der to a close com­pa­triot of the pres­i­dent to pro­vide 42 fire trucks to the state at the vastly in­flated price of $1-mil­lion each; the trucks were val­ued at only about $200 000 apiece.

De­spite the ac­tions of sev­eral civic groups, the pub­lic re­sponse re­mained muted. But as the scan­dals pile up and the econ­omy suf­fers, cit­i­zens are be­gin­ning to take no­tice. In a shock move in late Septem­ber, Bri­tain an­nounced that it, along with Ire­land, Fin­land and Swe­den, had frozen aid to Zam­bia be­cause of the re­ported mis­ap­pro­pri­a­tion of $4-mil­lion in funds ear­marked for so­cial cash trans­fers. Bri­tain’s aid freeze is be­lieved to af­fect health, ed­u­ca­tion, nu­tri­tion and so­cial wel­fare.

In early Oc­to­ber, the gov­ern­ment re­port­edly re­paid most of the miss­ing money, say­ing the funds had not been spent and were in fact not miss­ing.

To ad­dress its flail­ing cur­rency, the gov­ern­ment has had to in­crease the price of fuel. This has been an un­pop­u­lar move and sparked panic buy­ing.

The state has also failed to pay statu­tory grants to the coun­try’s largest univer­sity since Au­gust, prompt­ing a strike by restive staff and stu­dents. Last week, po­lice re­sponded to the strike with tear­gas, fir­ing it into a univer­sity res­i­dence and caus­ing the death of a fourth-year stu­dent, Ves­pers Shimuzhila. In a sign of the coun­try’s po­lit­i­cal po­lar­i­sa­tion, the rul­ing party blamed Shimuzhila’s death on op­po­si­tion leader Hakainde Hichilema.

In an­other ef­fort to balance their books, the state has tried to in­crease taxes on cop­per min­ing com­pa­nies. But the ad hoc na­ture of this change and its tim­ing has many con­cerned. The mines have warned that they may have to scale down pro­duc­tion in the face of the new tax regime. The threat­ened loss of min­ing jobs would be deeply un­pop­u­lar on the pop­u­lous Cop­per­belt, and will slash the coun­try’s for­eign ex­change earn­ings.

Lungu has come un­der grow­ing pres­sure from de­vel­op­ment part­ners and cit­i­zens about the coun­try’s grow­ing in­debt­ed­ness and the ris­ing costs of goods and ser­vices.

He has set his sights on se­cur­ing his can­di­dacy in the 2021 elec­tions, with a proxy bat­tle ongoing at the Con­sti­tu­tional Court over his el­i­gi­bil­ity to run in the polls. De­spite the court case, the rul­ing party has con­firmed his can­di­dacy and the posters and T-shirts have al­ready been printed.

But, with the econ­omy on the ropes, Lungu’s re-elec­tion chances in 2021 look in­creas­ingly slim. A re­view of on­line me­dia shows that web­sites such as News Dig­gers and Lusaka Times are filled with de­bate about whether the rul­ing party can hold the next elec­tion, and what might hap­pen to the party if their re-elec­tion bid fails.

The in­volve­ment of high-pro­file rul­ing party fig­ures in these de­bates lends cre­dence to the per­cep­tions of a prob­a­ble loss at the polls. Former close aides of Lungu are also criticising the pres­i­dent and the party, and ap­pear to be build­ing a plat­form to launch them­selves as pres­i­den­tial can­di­dates for 2021.

The debt cri­sis and wide­spread cor­rup­tion may be enough to take the pres­i­dency from the Pa­tri­otic Front. That is, un­less they be­gin to rely more on co­er­cion and elec­toral ir­reg­u­lar­i­ties to main­tain their hold on power. Per­haps that is why, even un­der an aus­ter­ity bud­get, the gov­ern­ment has raised mil­i­tary spend­ing for 2019 to nearly 6% of the to­tal bud­get, more than dou­ble the al­lo­ca­tion for so­cial as­sis­tance.

Then again, maybe the pres­i­dent would be wise not to be in power come 2022, when the first of three $1-bil­lion Eu­robonds ma­tures. No amount of pray­ing is go­ing to make the num­bers add up dif­fer­ently. Sene­gal will be­come the first African na­tion to host the sum­mer Youth Olympic Games. The West African coun­try will host the sport­ing event in 2022, the In­ter­na­tional Olympic Com­mit­tee an­nounced in Buenos Aires on Mon­day. Botswana, Nige­ria and Tu­nisia were also in the run­ning, but Sene­gal was ul­ti­mately cho­sen be­cause it pro­vided the “best value propo­si­tion and the great­est op­por­tu­ni­ties at this mo­ment in time”.

$2-bil­lion bonus for An­gola

Pres­i­dent João Lourenço took a brief trip to Bei­jing this week. In­stead of re­turn­ing to An­gola with a T-shirt or fridge mag­net, he came home with a tidy $2-bil­lion in fi­nanc­ing from the Chi­nese gov­ern­ment, ac­cord­ing to the state-run Jor­nal de An­gola. Lourenço has promised to di­ver­sify his coun­try’s oil-de­pen­dent econ­omy and is ex­pected to use the money to boost agri­cul­ture and tourism.

Cameroo­ni­ans wait anx­iously

Cameroon’s pres­i­den­tial elec­tion re­sults are due next week, but the op­po­si­tion party has al­ready claimed vic­tory. On Mon­day, Move­ment for the Re­birth of Cameroon can­di­date Mau­rice Kamto told the coun­try that he had “scored” in the elec­tion. But the gov­ern­ment has hit back, say­ing Kamto’s state­ment was “ir­re­spon­si­ble”. De­spite Kamto’s party hav­ing claimed vic­tory, an­a­lysts ex­pect in­cum­bent Paul Biya to be elected for a sev­enth term. The vote was marred by vi­o­lence be­tween the gov­ern­ment and sep­a­ratists in the coun­try’s south­west.

Down slide: Since Edgar Lungu came into power, the gov­ern­ment has spent large amounts on in­fra­struc­ture and goods and Zam­bia’s debt has bal­looned to a re­ported $9.4-bil­lion. Photo: Ro­gan Ward/Reuters

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