Zambian opposition leader Michael Sata has won the presidency, ending the 20-year rule of the Movement for Multiparty Democracy (MMD).
The Zambian Electoral Commission reported today – Friday - that Sata’s Patriotic Front won 43% of votes cast in a poll perceived to be largely free and fair – although marred by some outbursts of violence - against incumbent Banda’s 36%. While ballots from 16 constituencies remained unverified, the Commission reported that there were not enough voters left to swing the election for Banda.
Sata, known as “King Cobra”, took a strong line against Chinese involvement in Zambia – Africa’s top copper producer - in the 2008 election campaign, which he toned down this year. Sata’s win is thought to have been propelled by the resonance of his rhetoric with the youth and unemployed in urban areas and the copper belt who feel they have not benefited from Zambia’s growing economy. It comes against the backdrop of Zambia being re-classified as a middle income country in July this year and economic growth rates averaging 6.4% over the past five years. Zambia has been predicted to become the world’s fifth largest copper-miner by 2015.
Much attention will be drawn to the impact the result will have on Zambia’s relations with China, a key investor in the Zambian economy – in 2010, China trade with Zambia nearly doubled to reach $2.5 billion. However, 19 people died in two incidents last year when Chinese managers at coal and copper mines shot workers involved in labour and wage disputes.
Sata, who came close to defeating Banda in the country’s 2008 elections held after the death of then president Levy Mwanawasa, had labelled salaries at Chinese-owned mines “slave wages” and threatened to sever diplomatic ties and deport Chinese investors. Sata used less severe rhetoric in this campaign and told Reuters last week that he would maintain strong commercial and diplomatic ties with China and would not introduce a minerals windfall tax, instead hinting at using capital controls to keep dollars in the country. The Chinese Foreign Ministry welcomed Sata’s victory, declaring China would “continue to promote traditional friendship with Zambia and expand mutually beneficial cooperation in every aspect”.
"Sata's upset victory will likely usher in a new era for a resource-nationalist mining sector policy," Sebastian Spio-Garbrah, analyst at Africa consultancy DaMina Advisors, told Reuters.
"Sata has said that his government will insist that foreign miners keep all their export forex revenues within the country and only repatriate profits. He has called for a new revamp of the country's mining code and a review of mining contracts signed under Banda."
After Sata’s victory was announced, the kwacha fell 2.8% to a 14-month-low of 5,145 against the dollar. It is thought that until Sata’s policies are better understood the currency will remain vulnerable.
In a statement issued today – Friday – Banda said he wished Sata well and “prays his policies will bear fruit”. Looking back on the MMD’s 20 years in power, Banda said: “Frederick Chiluba led us to a genuine multi-party state and introduced the private sector to our key industries.
“Zambia was liberated by an MMD ideal but maybe we became complacent with our ideals. Maybe we did not listen, maybe we did not hear.”
As Think Africa Press has already reported, Banda welcomed Chinese investment and supported efforts to open special economic zones such as the Multi-Facility Economic Zone in Chambishi to attract Chinese and other investors and foster foreign direct investment and technology transfers. The tax breaks offered to investing companies – including no import duty on raw materials, capital goods and specific machinery for five years and a five-year moratorium on the taxing of company profits – are anticipated to be covered by the employment opportunities for local workers and the benefits of economic diversification enabled by the zones.
Zambia was given B+ sovereign risk ratings from international credit agencies Fitch and Standard & Poors, lifting it to the same status as Ghana, Kenya and Angola. In March this year, Fitch Ratings said its decision had been based on a marked improvement in Zambia’s economic performance since 2003 “driven by improved macroeconomic stability, economic liberalization, rising private investment and production in the mining sector, and more recently, a strong agricultural performance”. The IMF and ratings agencies have predicted good medium-term growth prospects “driven by rising public infrastructure investment and private investment and production in the mining sector”.
However, Zambia’s economic growth has not been inclusive and is struggling to diversify away from its reliance on the copper sector.
In 2008, in terms of earnings, 80% of the population were reported to have acquired only 31.3% of total income, with the top 20% of accruing 68.67%.
"The growth we are seeing in Zambia is due to more copper being dug out of Zambia because of the current high copper prices,” said Dr Fred Mutesa of Zambians for Empowerment and Development. “And given this government's position on the current tax regime, without windfall tax, the people won't benefit from this growth."
A key task for Sata will be to diversify the economy so it does not remain overly dependent on copper. Before a collapse in copper prices in the 1970s Zambia was classed a middle income country. In the years between then and a rejuvenation in prices in 2003 the country faced a 25-year economic malaise characterised by widespread poverty and the privatisation of mines under IMF and World Bank supervision at the end of the 1990s. Exports rose nine-fold from 2003 to $5.7 billion in 2010, with production peaking at 820,000 tonnes in 2010 - above the 70s levels.
However, it remains to be seen whether Sata will deliver such diversification or has the venom to follow through on his pre-election promises, with one analyst commenting that “his bark is worse than his bite”.
“Ever since the overthrow of Kenneth Kaunda in 1991 and the advent of the MMD government, what you have had are several splinter groups leaving the MMD.
“So what you have is not so much an MMD government with opposition parties but many MMD parties. The result of this is that there are almost no policy differences among the different variants and there is no policy debate.”
Whether or not Sata is able to set a new course for Zambia, his victory and Banda's ready acceptance of it point to a strengthening of Zambian democracy.
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