New leader pledges to stabilise Zambia’s shaky finances

Zambia’s new president Hakainde Hichilema pledged to rein in public debt and the budget deficit, while restoring the nation’s credibility after a default on its foreign loans. 

“Our focus over the next five years will be on restoring macroeconomic stability,” Hichilema said in his inauguration address in Lusaka on Tuesday. “We will grow our economy, so we can lift more people out of poverty than ever before.”

The entrepreneur and cattle rancher, who turned to politics in 2006, takes over an economy buckling under record levels of external debt, that led to Zambia becoming Africa’s first pandemic-era sovereign defaulter in November. GDP shrank 3% last year, the inflation rate is almost 25% and youth unemployment is rampant in a nation where the median age is less than 18 years.

We will grow our economy, so we can lift more people out of poverty than ever before.

—  Hakainde Hichilema

One of the new administration’s priorities will be to win the International Monetary Fund’s endorsement for an economic recovery programme and associated $1.3bn (R19.5bn) loan, a package that will underpin restructuring negotiations with holders of Zambia’s nearly $13bn (R195bn) in foreign loans.

Hichilema also needs to mend ties with copper producers that generate more than 70% of export earnings, to unlock at least $2bn (R30bn) in stalled projects. His predecessor Edgar Lungu’s administration had hostile relations with the industry that curtailed output and investment, even as prices for the metal surged to record highs in recent months.

Hichilema, 59, won the August 12 elections with 59% of valid votes cast, about a million more than Lungu — an outcome that was widely seen as a backlash against surging inflation and falling living standards. The election had the highest percentage voter turnout since 2006, and the victory margin was the biggest since 1996.

Hichilema was sworn in alongside vice-president Mutale Nalumango, a teacher who served as deputy speaker of the national assembly from 2006 to 2011. People slept outside the 60,000-seater stadium where the inauguration was held and filled it hours before the event began. Heads of state from 10 countries attended the ceremony.

– Bloomberg News. More stories like this are available on bloomberg.com