Rivals with money within PF will unite at the 2020 convention to challenge President Edgar Lungu’s ‘third term’, rating agency Fitch Solutions has stated.
And Fitch says the Zambian Kwacha will weaken due to poor investor confidence.
In its 10-year country risk report for Zambia, Fitch, which is one of the “Big Three credit rating agencies”, stated that President Lungu’s wealthy rivals would unite to dislodge him at the 2020 convention.
“Tensions within the ruling Patriotic Front (PF) will increase over the coming quarters as President Edgar Lungu seeks to side-line potential rivals ahead of 2021 presidential elections. In the run-up to the 2021 elections, internal power struggles will take place within the PF. In December 2018 Zambia’s Constitutional Court ruled that Lungu – in power since 2015 – may stand in the August 2021 election. While there is a two-term limit in the constitution, Lungu’s first term lasted only 18 months, since he took over after the death of incumbent Michael Sata. The court ruled that this did not constitute a full term, and that Lungu is thus eligible to stand again. In a public statement after the ruling, Lungu suggested that come senior PF members had been ‘manoeuvring’ to seek the presidential candidacy. Few rivals within the party have the resources to mount a serious challenge at the PF’s elective conference in 2020; Lungu will seek to marginalise those that potentially do,” Fitch Solutions stated.
“For example, the housing and infrastructure development minister Ronald Chitotela, has been charged with two counts of corruption. Graft is a serious issue in Zambia but there have been very few high pro le arrests previously. The arrest of a minister (on thus far unproven charges) could thus serve to improve the PF’s image, while also targeting potential contenders for the presidency. Notably, Chitotela is a member of the Bemba ethnic group, a major constituency within the PF with which Lungu has often been at odds.”
The rating agency also forecasted violence and an election which would not be free and fair.
“At Fitch Solutions, we expect Zambia’s overall social stability to deteriorate over the coming quarters. Tensions within the ruling Patriotic Front and between political parties will increase as President Edgar Lungu seeks to consolidate his position ahead of 2021 presidential elections by side-lining potential rivals. At the same time social unrest is set to increase, reflecting growing public frustration over corruption, high levels of unemployment and the government’s willingness to narrow the political space and to crackdown on potential challengers. These challenges will potentially act as a constraint on the reform process, and overall economic growth, leading to more en- trenched discontent. They will also lead to highly contested election, with heightened risks of violence and a vote that is not free or fair,” read the report.
Fitch stated that there was increased intolerance towards opposition and criticism, increased violence and Chinese involvement in the country.
“Increased Intolerance Towards Opposition And Criticism: This was demonstrated by the use of the Public Order Act to limit protests and the rights to freedom of expression. Moreover, the closure of one of the main independent newspapers, The Post, was another major step in the erosion of Zambia’s civil liberties. In the last instance, Hichilema’s imprisonment signalled Lungu’s commitment to tone down criticism and opposition voices. Increased Violence In The Country: Political violence has been on the rise in the country, stemming in part from unrest be- tween supporters of the government and opposition following the hotly contested April 2016 presidential election. Protests last year led to the killing of a UPND supporter by the police, and local supporters of both the ruling and the opposition party have been engaging in violent fights and demonstrations,” read the report.
“Chinese Economic Involvement: China has recently increased investment in Zambia in return for access to the country’s resources. While this has led to improvements in infrastructure, it has also led to rising resentment among Zambians against an influx of Chinese labour and goods perceived to be of low quality. The then-opposition PF leader Michael Sata ran a popular campaign at the 2006 presidential election on an explicitly anti-Chinese platform. During his time in office, President Sata backed off using such rhetoric, but, following his death, it remains unclear how the relationship between Zambia and China may change in the years ahead.”
Fitch noted that the 2021 elected would be highly contested.
“This deteriorating political environment will likely lead to a highly contested vote in 2021. A February 2019 by-election in Sesheke – won by the UNPD – was characterised by political violence, and many further such incidents are likely in 2020-21. Crackdowns will escalate if Lungu perceives his position to be vulnerable – if, for example, a viable opposition coalition selects a single candidate to oppose him. Political violence, plus the use of incumbency advantages, and possible introduction of additional security powers, suggest an elevated risk of a flawed electoral process, serving to entrench social tensions,” read the report.
And Fitch stated that the kwacha was poised to weaken.
“We at Fitch Solutions believe that the Zambian kwacha will face gradual depreciatory pressure in the short term due to negative investor sentiment. The extent of depreciation will be tempered in the short term by a relatively neutral policy stance by central banks in developed markets. Over the longer term we the kwacha will remain on a weakening trend given poor investor sentiment, a large stock of foreign currency denominated debt and poor real rates. In line with these factors we expect that the Kwacha will fall from an average of ZMW10.48/USD in 2018 to ZMW12.34/USD in 2019 and to ZMW12.9/USD in 2020,” read the report.
On press freedom, Fitch noted that it was fairly curtailed as strict libel and security laws were used to constrain independent reporting.