Zambia

Politics:

• Analysis

  Zambia politics: Quick View - Justice minister clashes with Anti-Corruption

  Event

  The justice minister, Wynter Kabimba, has been widely criticised for failing to co-operate with the Anti-Corruption Commission (ACC).

  Analysis

  The Law Association of Zambia (LAZ), civic groups and Western diplomats have questioned the sincerity of the government's anti-corruption crusade following Mr Kabimba's refusal to co-operate with the ACC. Mr Kabimba was summoned to the ACC as part of the Commission's investigation into allegations that he influenced the award of a tender for the supply of oil to a foreign company. The justice minister, however, refused to be interviewed unless his supporters or members of the ruling Patriotic Front (PF) were allowed to be present during the proceedings, which is not standard procedure. In response, the LAZ issued a strongly-worded statement criticising Mr Kabimba's actions and asserting that he had undermined the justice system of which, in his position as justice minister, he is the chief custodian. It went on to call on the president, Michael Sata, to send Mr Kabimba and the defence minister, Geoffrey Mwamba (who is being investigated on similar allegations of trying to influence the award of a public contract), on leave until the ACC concludes its investigations, asserting that is the only way to ensure that the investigations are independent. This appeal is unlikely to be heeded given that both men are influential allies of the president.

  Meanwhile, the clash between Mr Kabimba and the ACC will reinforce concerns that the ACC lacks the teeth to investigate cabinet ministers. It also calls into question the president's claim that his government will show no tolerance towards corruption, and gives credence to the widely held view that the government is selective in its efforts to enforce justice and tackle corruption, with its political opponents held to a much higher standard than its own members.

  December 06, 2012

• Background

  Zambia: Key figures

  Levy Mwanawasa

  Mr Mwanawasa has asserted his presidency by focusing on the fight against corruption and on prudent economic management. However, after suffering a major stroke in June 2008, his ill health is now dominating the political scene and he is unlikely to be able to complete his second term in office.

  Rupiah Banda

  Mr Banda is the vice-president and so holds the reins of power while Mr Mwanawasa is incapacitated. Although he has been a unifying personality within the Movement for Multiparty Democracy (MMD), his advanced age means that he is not a long-term solution to the party's leadership dilemma.

  Ng'andu Magande

  The finance minister is a popular figure after playing a major role in bringing about macroeconomic stability in Zambia. Mr Magande normally keeps a low profile in public life and his strict handling of public finances has distanced him from fellow ministers. Nevertheless, he is probably the favourite to succeed Mr Mwanawasa.

  Katele Kalumba

  Despite accusations of corruption levelled against him, Mr Kalumba remains a major political force and is another possible successor to Mr Mwanawasa. As MMD national secretary, he commands respect among the grassroots supporters.

  Michael Sata

  The outspoken politician is the most popular opposition leader in the country, largely because of his pro-poor populist policies. Mr Sata is a strong contender to become the next president but would be constrained by his own ill health after suffering a heart attack in the first half of 2008.

  Hakainde Hichilema

  The Lusaka businessman has emerged to become a respected political player within a short period of time after he was elected leader of the United Party for National Development in mid-2006. He represents the next generation of Zambian politicians and is a possible future president.

  Frederick Chiluba

  The former president, who ruled the country from 1991 to 2001, has seen his influence eroded by the ruling made against him in the British courts on corruption charges in 2007. Nevertheless, he remains popular domestically—especially among some of the influential Bemba ethnic group—and is unlikely to disappear from the political scene.

  The judiciary

  Despite some questionable judgments in high-profile political cases, the judiciary has managed to preserve its independence from the executive and legislature. Nevertheless, the strength and independence of the justice system has been seriously tested by the corruption trial of Mr Chiluba. There are doubts that the judicial system can properly handle the substantial, politically sensitive case.

  The legislature

  The 1996 constitution strengthened the formal powers of the unicameral legislature, the 158-seat National Assembly. However, MMD parliamentarians have rarely challenged their government, with the notable exception of their opposition to Mr Chiluba's third-term bid.

  Media services

  Zambia has one state-owned television and radio station, run by the Zambia National Broadcasting Corporation (ZNBC). A privately owned television station, Muvi TV, was given an operating licence in 2004 and has emerged as a serious competitor to the ZNBC, which had previously enjoyed a monopoly on domestic television broadcasting. There has been a boom in private radio stations following the liberalisation of airwaves in 2002, but few operate outside Lusaka. There are, instead, numerous community radio stations that operate in rural regions. The Zambia Daily Mail and the Times of Zambia are state-owned newspapers with consistently pro-government content. Independent newspapers periodically fight off government attempts to rein them in, often in the form of libel actions. The Post is Zambia's main independent newspaper, with a reputation for being strongly critical of the government. Nevertheless, all newspapers service a relatively small readership in an environment where not many people have the money to buy them.

  Democracy index (for methodology, see Appendix)

  The Economist Intelligence Unit's 2008 democracy index ranks Zambia 97th out of 167 countries, putting it among the countries considered "hybrid regimes". This designation includes neighbouring states such as Tanzania, Malawi and Mozambique, but Zambia ranks behind other neighbours like Namibia and Botswana. South Africa, ranked in 31st place, is a long way ahead in terms of its democracy. Zambia scores relatively well in the categories of political culture and civil liberties, reflecting the strong support from the population for the role of democracy, the relatively free press, and a strong freedom of expression. However, although there is a strong belief in democracy, Zambia scores poorly in terms of political participation, with voters often too busy scraping together a living to be able to participate fully.

  Democracy Index
  	Overall score	Overall rank	Electoral process	Government functioning	Political participation	Political culture	Civil liberties	Regime type
  Zambia	5.25	97	5.25	4.64	3.33	6.25	6.76	Hybrid regime
  Overall and component scores are on a scale of 0 to 10; overall rank is out of 167 countries.

  Download text file (csv format)

  July 31, 2008

• Structure

  Zambia: Political structure

  Official name

  Republic of Zambia

  Form of state

  Unitary republic

  Legal system

  Based on the 1996 constitution

  National legislature

  National Assembly; 150 members elected by universal suffrage, serving a five-year term; the president can appoint eight further members

  National elections

  Last presidential and legislative elections held on September 20th 2011; next presidential and legislative elections due in September 2016

  Head of state

  President, elected by universal suffrage for a term of five years

  National government

  The president and his appointed cabinet

  Main political parties

  The Patriotic Front (PF) is the ruling party and holds the largest number of seats in parliament; the Movement for Multiparty Democracy (MMD) is the largest opposition party; no single party holds a parliamentary majority; the other parties in the National Assembly are the United Party for National Development (UPND), the Forum for Democracy and Development (FDD), and the Alliance for Democracy and Development (ADD)

  Key ministers

  President: Michael Sata

  Vice-president: Guy Scott

  Agriculture & livestock: Emmanuel Chenda

  Chiefs & traditional affairs: Inonge Wina

  Commerce, trade & industry: Robert Sichinga

  Community development, mother & child health: Joseph Katema

  Defence: Godfrey Mwamba

  Education, science & vocational training: John Phiri

  Finance & national planning: Alexander Chikwanda

  Foreign affairs & tourism: Given Lubinda

  Health: Joseph Kasonde

  Home affairs: Kennedy Sakeni

  Information, broadcasting & labour: Fackson Shamenda

  Justice: Wynter Kabimba

  Lands, natural resources & environmental protection: Wilbur Simuusa

  Local government housing, early education & environmental protection: Nkandu Luo

  Mines, energy & water development: Christopher Yaluma

  Transport, works, supply & communications: Willie Nsanda

  Youth & sports: Chishimba Kambwili

  Central bank governor

  Michael Gondwe

  December 01, 2012

• Outlook

  Zambia: Key developments

  Outlook for 2013-17

  • The president, Michael Sata, and his party, the Patriotic Front (PF), will stay in power at least until the next elections in 2016. Broad political stability will be maintained, although sporadic labour unrest is likely to continue.
  • The election results will depend on whether the PF lives up to its campaign promises-such as improving the lot of ordinary Zambians-and whether the main opposition party is able to revamp its corruption-tainted image.
  • Macroeconomic stability is likely to be maintained, but there is uncertainty about the government's ability to strike a balance between meeting its supporters' expectations and encouraging investment.
  • Real GDP growth is forecast to average 7.3% in 2013-17, supported by large investments in infrastructure and mines, a surge in copper production and robust growth in services and agriculture.
  • The kwacha is forecast to depreciate by an annual average of 3.8%, to ZK6,210:US$1 in 2017, as strong growth in foreign investment and exports is offset by robust import demand and a strong US dollar.
  • The current-account position is expected to deteriorate in 2013 as imports grow rapidly, improve in 2014-16 as production of copper-the country's main export-rises sharply, and weaken in 2017 as export growth slows.

  Review

  • The PF's candidate, Stephen Masumba, has retained his seat in the by-election in the constituency of Mufumbwe. This follows his expulsion from the main opposition party for accepting a post as deputy minister in the cabinet.
  • A magistrate's court has acquitted nine public officials who had been charged with misappropriating donor funds from the Ministry of Health in 2009. This is likely to erode public confidence in the fight against corruption.
  • The government's plans to set up industrial clusters are unlikely to have much impact on growth given the challenges of creating clusters from scratch.
  • An online cadastre system for issuing mining licences is to be introduced in the first half of next year. This comes on the heels of Zambia's achieving "compliant status" under the Extractive Industries Transparency Initiative.
  • The IMF has issued another positive assessment of Zambia's macroeconomic performance, although it has aired some concern about large government-guaranteed loans to the Food Reserve Agency for the purchase of maize.
  • The kwacha's gains from the mid-2012 ban on using US dollars for local transactions have now unravelled completely, with the exchange rate hitting a four-month low of ZK5,284:US$1 at end-October.

  December 01, 2012

Economy:

• Background

  Zambia: Economic background

  Real gross domestic product by sector
  (% share of GDP)
  	2003	2004	2005	2006	2007
  Agriculture	22.8	20.8	18.5	17.9	17.4
  Industry	27.1	26.8	25.1	25.9	26.1
  Services	50.1	52.4	56.3	56.2	56.5
  Sources: World Bank; Economist Intelligence Unit.

  Download text file (csv format)

  July 31, 2008

• Structure

  Zambia: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 01, 2012

• Outlook

  Zambia: Country outlook

  Zambia: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: The president, Michael Sata, and his party, the Patriotic Front (PF), are expected to remain in power, at least until the next elections in 2016. The PF's first term will continue to be dominated by three issues: tackling corruption, redistributing wealth and cutting unemployment (although questions remain about the sincerity of its commitment to the first of these). No single party holds a majority in the National Assembly, but the PF's representation is likely to grow slightly, as the party has some success in wooing members of parliament from the former ruling party--the Movement for Multiparty Democracy (MMD)--through offers of political office. Broad political stability will be maintained, although occasional disruptions are likely. Mr Sata has toned down his pro-labour rhetoric, but despite this, the mining sector is likely to face intermittent strikes over wages and working conditions, particularly if copper prices stay high (as we currently forecast). Antagonism between the PF and the opposition is expected to persist and could hinder the functioning of government, as highlighted by the opposition's recent walk-out from parliament during the debate on the fiscal budget. In part this has its roots in the PF's heavy-handedness towards the opposition, marked by the recent arrest of the leader of the second-largest opposition party on charges of fabricating information (he was released on bail shortly after) and a highly dubious attempt to deregister the MMD on the grounds that it had not fully paid its statutory fees. Finally, a power struggle between two influential allies of the president could undermine unity within the PF, hampering its efforts to gain a parliamentary majority.

  ELECTION WATCH: The next elections, due in 2016, are expected to be free and fair, although the run-up to voting is likely to be marred by bias in the state-owned media and the incumbents' use of public resources to fund their campaigns. Some election-related violence could occur, particularly if Mr Sata continues to antagonise the opposition. The result of the elections will depend on whether the PF lives up to its campaign promises and whether the MMD is able to revamp its image, which has been badly damaged by allegations of corruption.

  INTERNATIONAL RELATIONS: Zambia's relations with China are expected to stay stable as Mr Sata, formerly a critic of Chinese investors, has softened his position--an implicit recognition of China's importance as a source of investment. Relations with Western donors could deteriorate if abuses of office occur under the new government, or the incidence of corruption were to rise. Zambia is expected to remain largely on good terms with other countries in the region, underpinned by its membership of two regional trade blocs: the Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community (SADC). Mr Sata has expressed support for Zimbabwe's president, Robert Mugabe, placing him among a number of his peers in SADC but at odds with South Africa.

  POLICY TRENDS: The policy agenda will remain geared towards boosting revenue from mining, supporting local enterprises, tackling unemployment and raising domestic purchasing power. Further measures are likely to raise the tax take from the mining sector, partly by ensuring better compliance with existing tax rates. The government has also said that it will negotiate increases in its stakes in the mines to 35% (from 10-20.6% at present). The mining companies' reaction to recent policy announcements and changes (including a doubling of the royalty rate on base metals from 3% to 6%) has been muted, and we believe that further changes are likely to be tolerated, as long as they are not handled badly. (If, for example, the government were to renege on its commitment to increase its stakes in the mines via negotiation rather than coercion, investment in the sector would fall.) Infrastructure will improve as a five-year, US$5.6bn scheme to upgrade the road network is implemented. Power generation is expected almost to double in 2012-17, curbing the frequency of power cuts but not eliminating them. The fiscal incentives for investments in "priority sectors" (which include floriculture, agro-processing and the manufacture of engineering products) have been retained, although they are now conditional on firms meeting certain employment targets. The incentives could be lowered over the forecast period, as the investment threshold of US$500,000 for eligibility means that they mostly tend to favour foreign companies. Despite high levels of public spending on education, progress in improving its quality and relevance will be slow.

  ECONOMIC GROWTH: Real GDP growth moderated to an estimated 6% in 2012 as maize and copper output fell, offsetting the impact of faster growth in public spending and measures by the government to support consumer spending. It is forecast to pick up to 7% in 2013 as maize and copper output recover, while investment in power, roads and mines continues to grow rapidly. In 2014-16 real GDP growth is expected to increase further to an annual average of 7.9% as copper production soars on the back of the completion of major projects at the Kansanshi, Lumwana and Konkola mines and First Quantum's new Trident mine. Our forecast allows for delays in these projects (extending beyond 2013-17), and growth would be higher if they were completed on time. In 2016 growth will also be supported by a rise in public spending ahead of the elections. A moderation to 5.5% is expected in 2017 as the copper boom winds down, but other sectors will continue to grow robustly.

  INFLATION: Inflation is expected to remain in single digits throughout the forecast period as output of the staple food, maize, continues to exceed domestic demand. This will help to curb food prices, which account for 53% of the consumer price index. A relatively stable exchange rate will also check inflation by limiting growth in the price of imports. Inflation is forecast to ease from 6.5% in 2012 to 6.2% in 2013 as fiscal policy is tightened and growth in electricity prices slows (following large tariff increases towards cost-recovery levels in recent years). It will remain close to that level in 2014-17 as tighter fiscal policy counters the impact of a gradual increase in global oil prices. It would increase more sharply in the event of drought, as agriculture is largely rain-fed.

  EXCHANGE RATES: The kwacha's value will be supported by strong growth in copper production in 2014-16, large foreign investment inflows, high public external borrowing and relatively low domestic inflation. This will be offset by robust import demand, a strengthening US dollar and a winding-down of the boom in global copper prices. Overall, we expect the kwacha to depreciate by an annual average of 3.8%, from an estimated ZK5,149:US$1 in 2012 to ZK6,210:US$1 in 2017. The predominance of copper in the export basket will continue to expose the currency to external shocks. The planned rebasing of the kwacha will alter the value of our forecasts--for example, from ZK5,509:US$1 to ZK5.51:US$1 for 2013--although their substance will remain unchanged.

  EXTERNAL SECTOR: Trends in the current account will continue to be shaped by the trade surplus. Having shrunk from 11.2% of GDP in 2011 to an estimated 4.8% of GDP in 2012, as output of copper (accounting for more than 80% of exports) contracted, the trade surplus is forecast to widen sharply, reaching 17.2% of GDP in 2016, driven by a surge in copper production, before moderating in 2017. Imports will grow robustly during the forecast period, driven by high domestic demand and strong investment growth. The services deficit is forecast to widen as tourism growth is outweighed by a rise in services debits (in line with goods imports). The income deficit is expected to grow steadily as mine profits rise. Transfer inflows are forecast to increase in line with aid, but will remain small and have little impact on trends in the current account. Overall, the current-account deficit is expected to widen to 6.2% of GDP in 2013, narrow in 2014-15, turn into a surplus of 0.4% of GDP in 2016 and then return to a deficit of 2% of GDP in 2017. Senior government officials have made contradictory statements on the introduction of restrictions on the repatriation of export earnings; we have not incorporated such controls into our forecasts. If they were introduced, income debits would be lower and the deficits slightly smaller than forecast over the short term. Conversely, the longer-term impact could be negative, as such measures would damage investor sentiment and curtail export growth.

  December 01, 2012

• Forecast

  Zambia: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	6.0	6.9	8.3	7.8	7.7	5.5
  Gross industrial growth	7.0	8.6	13.3	11.5	9.8	5.7
  Gross agricultural production growth	3.0	6.0	6.1	5.8	5.9	5.8
  Consumer price inflation (av)	6.5	6.2	6.3	6.2	6.7	6.4
  Consumer price inflation (end-period)	6.5	5.7	5.9	5.8	6.0	6.5
  Lending interest rate (av)	13.0	12.5	12.2	13.0	12.8	12.5
  Government balance (% of GDP)	-5.7	-5.5	-3.3	-1.7	-2.9	-2.3
  Exports of goods fob (US$ m)	8,320	9,736	12,341	15,035	17,291	17,839
  Imports of goods fob (US$ m)	-7,263	-8,155	-9,261	-10,417	-11,823	-13,064
  Current-account balance (US$ m)	-1,075	-1,059	-338	429	575	-404
  Current-account balance (% of GDP)	-5.1	-4.7	-1.4	1.6	2.0	-1.3
  External debt (year-end; US$ bn)	5.4	6.0	6.6	7.2	8.0	8.8
  Exchange rate ZK:US$ (av)	5,100	5,343	5,611	5,687	5,891	6,056
  Exchange rate ZK:¥100 (av)	6,422	6,468	6,470	6,390	6,392	6,624
  Exchange rate ZK:€ (av)	6,547	6,745	7,027	7,037	7,423	7,616
  Exchange rate ZK:SDR (av)	7,877	8,187	8,459	8,515	8,837	9,090
  a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.

  Download the numbers in Excel

  Download text file (csv format)

  November 07, 2012

View detailed map

Country Briefing

Land area

752,612 sq km

Population

13.83m (World Gazetteer estimates, 2012)

Main towns

Population in '000 2012 (World Gazetteer)

Lusaka (capital): 1,526

Kitwe: 562

Ndola: 518

Kabwe: 221

Chingola: 183

Mufulira: 144

Livingstone: 141

Luanshya: 134

Climate

Tropical, cool on high plateaux

Weather in Lusaka (altitude 1,277 metres)

Hottest month, October, 18-31°C; coldest month, July, 9-23°C (average daily minimum and maximum); driest month, August, 0 mm average rainfall; wettest month, December, 231 mm average rainfall

Languages

English (official), Nyanja, Bemba, Tonga, Lozi and other local languages

Measures

Metric system

Time

2 hours ahead of GMT

Public holidays

New Year's Day (January 1st), Good Friday, Easter Monday, Labour Day (May 1st), Africa Day (May 25th), Heroes' Day (first Monday in July), Unity Day (first Tuesday in July), Independence Day (October 24th), Christmas (December 25th-26th)

March 09, 2012