Zambia’s President is short on allies as international concerns grow over corruption

On 18 October 2018, Zambia will mark the third annual ‘National Day of Prayer Fasting, Repentance and Reconciliation.’ Instituted in 2015 by President Edgar Lungu, the Day of Prayer has come to be seen as his initiative. But as the country is rocked by rising fuel prices, a rapidly depreciating currency and an apparent foreign aid crisis, it seems 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 PF took power in 2011, and within 7 years it has ballooned to a reported $9.4 billion – though experts fear that there is more unreported debt already accrued. The IMF and international markets now consider Zambia at high risk of debt distress. The country’s currency – the Kwacha – has depreciated by 20% so far this year, matched only by the currencies of Turkey, Angola and Argentina.

While talks had been underway for a $1.3 billion IMF package since 2015, the increasing recklessness of the administration’s borrowing ultimately scuppered the plans. The IMF’s representative, Alfredo Baldini, was eventually recalled to Washington after the Zambian authorities claimed that he had been too critical and outspoken against the Zambian government. Baldini had repeatedly raised the issue of Zambia’s high levels of opaque debt, and had suggested that a bailout would be hard to justify under current state spending conditions.

Since the president’s ascendance in January 2015, corruption has become an increasingly apparent mainstay of public life. The ruling Patriotic Front has undertaken a whirlwind infrastructure spending spree, with the government procuring goods and services at vastly inflated costs.

Amidst a growing list of scandals, one that stands out was the awarding of a tender to a close compatriot of the presidents to provide 42 fire trucks to the state at the vastly inflated price of $42 million dollars. Although they were sold to the state for a million dollars each, the trucks were valued at around $200 000 dollars. Despite the actions of several civic groups, the public response remained muted.

But as the scandals pile up and the economy suffers, average citizens have begun to take notice. In a shock move in late September, the UK’s Ambassador to Zambia – Fergus Cochrane-Dyet – confirmed that the UK (along with Ireland, Finland and Sweden) had frozen its aid to Zambia over reported misappropriation of $4 million in funds earmarked by DFID for Social Cash Transfers. The UK’s aid freeze is believed to affect health, education, and nutrition as well as social welfare.

In early October, the government reportedly repaid 2.7 million pounds to DFID, arguing that the funds had not yet been spent and were in fact not missing. But rumours are circulating that the missing $4 million is just the tip of the iceberg, and that there is a multi-million dollar fraud investigation currently being completed into Zambia’s education ministry.

Meanwhile, to address its flailing currency, 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 concerns of a strike amongst restive staff and students. In an effort to balance their books, the state has also tried to increase taxes on copper mining companies – the mainstay of the country’s foreign exchange earnings. But the ad-hoc nature of this change, and its timing has many concerned and the mines have warned that they may have to scale down production in the face of the new tax regime.

What about Lungu?

The Zambian president has come under growing pressure from development partners and citizens over the country’s growing indebtedness and the rising costs of goods and services. Having avoided the spotlight, his sights had been set 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. The ruling party has confirmed his candidacy and the posters and t-shirts have already been printed.

However, with the economy on the ropes, President Lungu’s re-election chances in 2021 look increasingly slim – even if the Constitutional Court confirms his eligibility. A review of online media shows that websites such as News Diggers and Lusaka Times are filled with debates over whether the PF can hold the next election, and what might happen to the party if their re-election bid fails. The involvement of high profile PF leaders in these debates (who appear to confirm the low chances of re-election) lends credence to the perceptions of a probable loss at the polls.

The debt crisis and widespread corruption may be enough to take the presidency from the PF. That is, unless they begin to rely more on coercion and electoral shenanigans to maintain a hold on power. Even under an austerity budget, the government raised military spending for 2019 to nearly 6% of the total budget, more than double the allocation for social assistance. Six activists who protested against the fire trucks scandal remain in court, fighting charges that Amnesty International denounced as politically motivated.

Democracy in Zambia seems to be stuttering as the president seeks to keep himself in power. But as the first of the three $1 billion dollar Eurobonds mature in 2022, and the country’s budget struggles to repay the massive loan, it may be more in his interests to not be the country’s head of state.

The Minister of Finance, Margaret Mwanakatwe, recently implored domestic business interests to remain upbeat about the economy, to be positive and to continue to invest in a climate of declining investor confidence and a tottering economy. This, and the country’s annual day of prayer appear to be the government’s two main strategies to deal with an increasingly precarious economic and political environment. However, a turnaround is likely to require far more than this.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.