The New Geopolitics of Energy
Last January, Zambian President Edgar Lungu of the Patriotic Front (PF) party was elected to replace late President Michael Sata by a small margin of 28,000 votes over his opponent, United Party for National Development (UPND) leader Hakainde Hichilema. With only 32 percent of registered voters casting ballots for either candidate, and given that the victor will only hold office for 20 months, the election could be seen as insignificant. In fact, it signifies a change in party politics ahead of what may well be uncertain times for Zambia. The nation is navigating the complexities of a copper mining boom, upcoming loan repayments, and crumbling infrastructure. In that context, January’s by-election represented a dramatic repositioning of party politics and factional interests that could undermine progress, inhibit growth, and imperil Zambia’s otherwise promising long-term economic outlook.
The story begins with Sata’s 2011 victory, which marked a radical break from Zambia’s neoliberal, multi-party era that had followed the demise of former leader Kenneth Kaunda’s socialist regime in 1991. Sata’s Patriotic Front (PF) party curbed the uncontested rule of foreign capital in the mining sector, condemned government corruption, raised the minimum wage in certain sectors, increased civil servants’ salaries, and intervened directly in labor disputes with Chinese mining companies. Zambia’s issuance of ten-year government bonds in 2012 and 2014 provided the nation with a $1.75 billion cash influx in the midst of rapid expansion of the private sector driven by the copper boom—Zambia averaged nearly 8% of GDP growth a year in the 2004–13 decade. Sata channelled Zambia’s newfound fortune into infrastructure projects, including the rehabilitation and construction of thousands of miles of roads, rural electrification projects, and the construction of new health clinics and housing for civil servants. There were major downsides to Sata’s fiscal policy, however: The government never planned for public debt repayments. In addition, there were widespread corruption allegations and accusations that the PF had recklessly expanded the civil service with family members and people from Sata’s ethnic group, the Bemba.
Health concerns and a deepening rift within the PF marked Sata’s final months in office, and following his death in October, 2014, a struggle for party succession erupted. Party members began breaking ranks over the question of whether to favor the Bemba faction or resort to broader populist policies. The Bemba bloc, led by Finance Minister Alexander Chikwanda (who is also Sata’s uncle), was thought to be behind the sacking of Justice Minister and PF Secretary General Wynter Kabimba in August 2014. Kabimba had been pivotal in building the party’s grassroots populist organizational structure, and was considered Sata’s right-hand man and a probable successor to the presidency. Having lost the ideological and electoral battle within the party, Kabimba resigned at the end of November last year and went on to form the Rainbow Party the following month. He is set to run in the 2016 presidential election, slated for September next year.
Kabimba has the potential to attract the support of prominent factions that are still with PF, but he does not have much time to build grassroots consensus. Many Zambians see Lungu as weak, with few prospects of winning again in 2016. He does have the advantage of controlling the levers of state power, however. If the Bemba faction continues to support him, he still has a fighting chance. His main rival during the by-election, Hichilema, is on an upward trend and has a strong chance of winning. Although his party has more than doubled its vote share over the 2011 election, questions remain about Hichilema’s suitability for the presidency; his business interests may foreshadow policies that favor his own investments rather than the general public. Hichilema is reported to have benefited from 1990s privatisation initiatives, having made $12 million in commissions and fees. Lungu and Hichilema lack a clear policy vision for the country. Kabimba, on the other hand, is supported by sectors of the Zambian intelligentsia that played a key role in the development of Sata’s pro-poor agenda. They are likely to help Kabimba develop a stronger programme. He might be the man to watch in the longer term, but a victory in 2016 is unlikely.
Although Zambia is one of Africa’s most stable democracies, and global copper demand provides the nation with vast financial opportunities, it faces major structural challenges. Newfound wealth has paved the way for the construction of new housing projects and shopping centers, and has created a service economy that—when combined with renewed development interest in Zambia’s non-mineral resources—can offset future fluctuations in the copper market. These growth opportunities, however, risk being stymied by sluggish infrastructure improvements, rampant income inequality, and undermanaged public health initiatives. Although public spending has increased, tax revenue collection has not: Mining companies continue to evade taxes through transfer pricing and are resisting moves to increase government royalties. The campaign for the 2016 election has already started, and the vote will be crucial in determining Zambia’s future. The next president will need to get serious about policies to manage the current boom in a sustainable and inclusive manner. If short-termism and factional interests prevail, Zambia could be on a collision course with failure by 2022 when bond repayments begin. Political factions and infighting do little to promote good governance, and Zambia could be left without stable leadership when the nation needs it the most.