MOUNTING debt that Zambian president Edgar Lunga incurred in order to meet on previous election promises could prove his undoing, said Bloomberg News.
A week ahead of the southern African country’s national elections, the newswire said his long-time rival, Hakainde Hichilema, had his best chance of overhauling Lungu’s Patriotic Party. Hichilema, a former businessman, has contested the last five elections.
A spending binge that has funded infrastructure development and farming has also left Zambia with about $13bn of foreign debt and culminated in a default that’s made life harder for Zambia’s 18 million citizens, said Bloomberg News.
The currency slumped last year, driving inflation to the highest level in nearly two decades at almost 25%, and gross domestic product shrank for the first time since 1998, said Bloomberg News.
Part of Lungu’s legacy has been repeated clashes with industry, especially Zambia’s copper sector which has been the bedrock of the economy in the past.
“In all my years in politics, I have never seen such an overwhelming thirst for change,” Hichilema told Bloomberg News. “After years of suffering, the public is desperate for change and a new start.”
Hichilema, 59, told the newswire he can achieve an economic growth rate of more than 10% within five years if he’s elected, mainly by growing the mining, agriculture, construction, and manufacturing industries. He also intends to seal a financing deal with the International Monetary Fund as soon as is technically possible and initiate debt restructuring talks with external creditors, it said.
Whether this will come in time to assist Vedanta Resources, a long-time investor in Zambia, is an unknown. The Indian company lost control over the assets in Konkola Copper Mines following an apparent confiscation by the Zambian government. Lungu’s administration claimed Vedanta had failed to deliver on investment promises.
In February, Vedanta warned potential buyers of assets in Konkola Copper Mines that any corporate activity would be “deemed inappropriate”, and that it would seek to protect its interests in Zambia and internationally.