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EIU FORESEES INSTABILITY IN ZAMBIA

THE latest report of the Economist Intelligence Unit has forecast substantial threats to Zambia’s political stability owing to “unusual degree of social division and political intolerance under the presidency
of Edgar Lungu”.

And the EIU has maintained its earlier projection of President Lungu’s victory in the 2021 elections using incumbency powers. Meanwhile,  the report has downgraded Zambia’s score on the Democracy Index, deteriorating sharply from 5.99 in 2016 to 5.68.

This has lowered the country’s global ranking in the index from 77th (out of 167 countries) to 85th.

The April 2018 report of the EIU has reiterated that unrest was likely to break out when the Constitutional Court delivers its verdict on
whether Mr Lungu is eligible to stand for another term in the 2021 election.

“Zambia will face substantial threats to political stability in 2018-22. Much of this stems from what is for Zambia an unusual degree of social division and political intolerance under the presidency of Edgar Lungu. Given the widespread perception among the opposition that corruption is worsening and Zambia is descending into authoritarianism, pent-up frustration could spark serious turbulence,”
EIU has stated.

“For example, unrest is likely to break out when the Constitutional Court delivers its verdict on whether Mr Lungu is eligible to stand for another term in the 2021 election; the date for the verdict has not been given. If another term is deemed unconstitutional, Mr Lungu has himself publicly warned the Constitutional Court of chaos. So if the ruling goes against him, disturbances could be severe enough to prompt a political crisis, but as the president appoints Constitutional Court judges, such a verdict is unlikely. But clear politicisation of the judicial process also means that a ruling deeming him eligible to stand again is likely to be perceived as tainted by the opposition.”

Any related unrest is likely to be in the form of opposition protests, the EIU states, potentially on a large scale and involving low-level violence.

“The 2021 election will be another volatile period, during which the government will look to aggressively narrow the political space. If disorder becomes widespread, as is likely, extra security powers could come into force, as they did for three months in 2017. On the one hand, this would act as a mechanism for bolstering overall stability; on the other, it would reinforce perceptions that Zambia is staggering towards autocracy and exacerbate underlying social tensions,”
the report stated.

“The government will continue to be split between a conservative (“old guard”) faction that founded the ruling Patriotic Front (PF), which has long been sceptical of the president, and loyalists of Mr Lungu. Ministers from the old guard have already been purged or have resigned presaging a wider restructuring of the party but this drive recently lost momentum when the finance minister, Felix Mutati, was demoted in an apparent concession to this faction, which has long wanted him out of cabinet. Politically, this reshuffle demonstrated that Mr Lungu’s control
over the party is based more on short-term manoeuvring than on a clear strategy (other than his overarching goal of securing the PF’s presidential nomination at a party congress in 2020). Therefore, although open rivals for the party’s presidential nomination are still likely to be purged, the process will be erratic and will leave the government unstable and policy implementation unpredictable.”

On the 2021 elections, the report maintained the possibility of President Lungu winning the coming elections on the back of strong incumbency powers.

” The next presidential and legislative elections are due in August 2021. Assuming Mr Lungu is deemed eligible to stand again, his control over the party machinery and the support of most of the Central Committee, as well as a tightening grip on the media and state institutions, should see him secure the PF nomination. Influential (and usually old guard) rivals will also be expelled or opt to leave. But this will come at a cost—all politicians that have left office so far have chosen to expose official mismanagement on their way out; corruption is a deepseated public
concern—and for good reason—so citing it is a means by which ambitious politicians leaving government can begin afresh, in opposition, with a powerful campaigning message at their disposal,”
the EIU stated.

“As the PF shake-up continues there will probably be similar allegations, and the associated bad press would be damaging for the PF. Standing to gain from all this is the National Democratic Congress (NDC)—founded by an exPF minister expelled by Mr Lungu in mid2017—which is already making inroads into the ruling party’s Copperbelt heartland on an anti-corruption platform. If key PF members switched over to this new party, it would split the vote to the ultimate benefit of the United Party for National Development (UPND), Zambia’s largest opposition party but one with a comparatively small presence in the Copperbelt. Even so, the UPND has become relatively timid since fierce government crackdowns on its leadership in 2017 and seems to lack the direction to exploit such a scenario. As things stand, and given strong incumbency powers (which were used to maximum effect in the 2016 election and have only increased since then), The Economist Intelligence Unit retains its our forecast of a victory for Mr Lungu in 2021. However, this forecast does carry risks; for example, a UPND-NDC alliance would be a game-changer.”

And on democracy, Zambia’s score in the EIU  2017 Democracy Index has once again deteriorated sharply, from 5.99 in 2016 to 5.68.

In 2016, Zambia was demoted from a “flawed democracy” to a “hybrid regime”, a designation also encompassing Nigeria, Mali, Kenya and Uganda.

“Zambia now ranks ninth out of 44 countries surveyed in Sub-Saharan Africa, down from eighth last year…The main driver behind Zambia’s continued fall in the ranking was its score for electoral process, which fell from 7.08 in 2016 to 6.17; clashes between supporters of the ruling and opposition parties frequently involve violence, and a culture of fear and intimidation has now become commonplace in parts of the country. Voters in by-elections have been unable to cast their ballots free of threats to their security. In addition, and exerting a constant weight on the score, media outlets known to be critical of the government have been harassed and clamped down upon in 2017 and opposition supporters have routinely claimed they are prevented from operating freely.
That said, the score for electoral process is still among Zambia’s highest. Elections are held regularly, are contested by multiple parties and do, despite mounting restrictions, offer the opposition a chance of forming a government,”

the EIU has stated.

It also highlighted a decline in functioning of government, which saw the steepest decline, already seen as a weakness for Zambia, with the score falling from 5.36 to five.

“Accountability of public officials has always been low, but checks and balances on the executive were shown to be seriously flawed after the leader of the opposition, Hakainde Hichilema, was arrested for treason at the president’s request. The charges against him were widely seen as farcical and later dropped, although the episode underscored an unhealthy level of executive authority in Zambia. The other category to see a score change was civil liberties, with the score dropping from 6.76 in 2016 to 6.47. This again reflects inordinate interference in the judicial system, namely warnings from the president to the Constitutional Court that ‘chaos’ would ensue if it rejected his eligibility for a third term,”

EIU stated.
“Generally, the score for civil liberties has been on a slow downtrend in Zambia; restrictions on or the shutdown of opposition-leaning media has led to an increase in self-censorship, and many are now switching to a much more neutral or pro-government stance, stifling the diversity of media opinion.”

On application of the Public order Act, the report states that “the authorities have frequently and excessively invoked the Public Order Act to smother political freedoms”, leading to a decline in political participation.

“Although public support for democracy has dipped slightly, an increasing majority of Zambians still oppose excessive presidential powers. Despite this, Zambia scores poorly in the political participation category, primarily because there are limited avenues for citizens to demand accountability from their elected representatives between elections, and also because most people are too preoccupied with scraping together a living to play a more active role in politics,”

it stated.

On the pending IMF package to bolster Zambia’s financial position, the EIU states that the aid could only come through once government tightens its fiscal position, a feat highly unlikely considering the massive infrastructure projects lined up.

“The government will have recourse to IMF funding eventually, but given the rapid build-up in public debt in recent years, we now expect an assistance package to be agreed in 2019 after the government adopts a tighter fiscal stance and the new finance minister, Margaret Mwanakatwe, has been able to implement meaningful steps to control debt accumulation. Some difficult reforms and fiscal austerity measures will be required to secure and maintain IMF backing but, without the boost to creditor confidence that comes with a programme, Zambia will struggle to access much-needed concessional loans (domestic debt is costly) and, perhaps most crucially, refinance part of its Eurobond stock on more favourable terms,”

stated the EIU.

“The IMF programme will be central to the country’s seventh national develop ment plan (NDP7), spanning 2017 21, at the heart of which is an attempt to stimulate valueadded industrialisation in the mining sector and economic diversification. For this to work, policy stability—something the government has struggled with in the past—is being stressed as vital, but we remain sceptical, with high copper prices already emboldening the government to make ad hoc interventions in the mining sector. Questionable regulatory changes have already been made and, although some measures will be reversed, further interference could include export taxes on unprocessed goods and local-content requirements that will undermine investment in the longer run. Still, upward adjustments to electricity tariffs should see a wave of private investment in the energy sector, supporting a slow expansion of power generation.

Fiscal policy Although fiscal policy will notionally tilt towards consolidation to win over investors and the IMF, the political will to tighten fiscal policy has come into increasing doubt since Mr Mutati’s removal from the finance ministry. Although the new finance minister, Margaret Mwanakatwe, has pledged to continue with the agenda of her predecessor, she is more embedded in party structures than he was and so will struggle to persuade an unwilling cabinet to accept fiscal consolidation.
That said, there is enough of a consensus for some budget cuts to be implemented, which should bring spending down as a proportion of GDP terms from 2019. These include further cuts to electricity and fuel subsidies, as well as winding down the input support programme for farmers.
Cuts in personnel will be harder, and resistance from the cabinet will impede reforms to state-owned enterprises and ministerial expenses. The election period in 2021 will also see a partial abandonment of the consolidation agenda.”

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