Zambia: Debt, Unpaid Salaries and A Poor Harvest Have Sown Seeds Of Crisis
By Joburg Post
In the volatile landscape of southern Africa, Zambia is often overlooked. It played a huge role in the liberation struggles of its neighbours. The ANC, banned in South Africa by the apartheid government, established its exile headquarters in Lusaka. The SWAPO movement, fighting for a free Namibia, was also headquartered there. Joshua Nkomo’s wing of the armed struggle in Zimbabwe was there, too.
In the 19th century, Zambia was deeply influenced by Cecil Rhodes and his form of corporate colonialism on behalf of the British crown. Rhodes dreamt of a Cape to Cairo road - and the main street of Lusaka is still called Cairo Road, before it branches into the Great North Road.
But, with the closing phase of apartheid, and the fall of founding president Kenneth Kaunda in multiparty elections in 1991, Zambia largely slid from the world’s view as eyes turned to the emergence of Nelson Mandela’s South Africa, and then the degeneration of Robert Mugabe’s Zimbabwe.
Meanwhile, Zambia appeared to be having an ongoing democratic revolution. Presidents and parties fell and new ones arose. But every new party was a descendant of Kaunda’s original. Until the current president, Edgar Lungu, every previous leader had also served in a Kaunda cabinet and there was no real difference in policy between them.
There was bitterness, however. This was certainly apparent during the 2016 election of Lungu – who forced his way to the succession during fragmented and competing party conventions after the death in office of president Michael Sata.
For a short time after his death, Sata’s vice-president, Guy Scott, acted as president. Sata used to joke that “there are two countries on Earth with a black president and a white vice president – the US [Obama and Biden] and Zambia [Sata and Scott]”. Scott was well liked by the Zambian public – but recognised that a white man, even if Zambian, could not be an African president. In southern Africa, white rule was still a living memory and apartheid was still fresh in people’s minds.
The subsequent election campaign between Lungu and Zambia’s opposition leader, Hakainde Hichilema, was full-blooded. Hichilema offered new industrial and technocratic policies – including a solar energy programme – that were probably not well understood by the electorate. Lungu, meanwhile, unveiled a string of new building and energy projects – showpieces that suggested progress and prosperity – and this probably helped win him the election.
He was savage to Hichilema afterwards, arresting him for treason after the two men’s motorcades wouldn’t give way to one another. Hichilema was later released, but Lungu signalled he would be an impatient president, and the showpiece projects kept coming. The only problem was that most were financed by borrowed money.
The result, three years into his term and two years before the next election (in 2021), is a dawning awareness of the scale of the country’s debt – likely in the region of US$10 billion, much of which is due for repayment shortly after the 2021 elections.
The showpiece projects, which Lungu has staked his future on, cannot be cancelled – but there is not enough money in the country’s budget to pay the salaries of medical, military and educational personnel, or other public servants.
In a country with a very low rate of formal employment, the extended families of these public servants are likely to be going hungry, especially so after a very poor harvest. The huge sums devoted to showpiece projects have also encouraged corruption to thrive.
International assistance is also unlikely. Just before Easter, Zambia’s finance minister, Margaret Mwanakatwe, went to Washington, along with several other African finance ministers, for the spring meeting of the IMF and World Bank. While she spoke confidently of the debt being an investment for the future, she offered no firm figures, and certainly no news of debt relief, debt rollover or debt renegotiation.
Indeed, a statement released by both the World Bank president, David Malpas, and IMF managing director, Christine Lagarde, spoke of the messiness of debt incurred by many borrowing countries. They complained that countries did not even have coherent records of how much debt – or the types of debt – they had incurred. There were too many lenders and too many different terms and conditions attached to the loans. Not all were transparent.
In short, without mentioning Zambia by name, they seemed to indicate that a country like Zambia would face huge complications in restructuring its debt. And the barely veiled hint was that the IMF and World Bank would take a hard line in any negotiations towards such restructuring. “The seeds of crisis” have been sown, according to one IMF spokesman.
But what will all this mean for politics in the country? Opposition leader Hichilema is not the force he once was – but new figures will likely enter the fray in 2021.
Lungu is also struggling. Shortly before the IMF World Bank meeting, Lungu’s party fell to a decisive by-election defeat. How will Lungu, his own health not rumoured to be consistently good, react to a powerful new challenge – especially if salaries remain unpaid and it becomes clear to the electorate that debt will force a post-election crisis? New challengers could focus on those issues and capitalise on them.
At this stage, it is not clear who such a challenger might be, or if anyone can mobilise national support to take on an incumbent prepared to use state resources in his campaign.
Nevertheless, the once overlooked country in Rhodes’ former troika of southern African states might yet become a focal point in the region – and, indeed, in Africa as a whole. Unfortunately, this may be for reasons it might not welcome; a warning that financial recklessness has a price.