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Zambian President Lungu’s labours

Posted on Tuesday, 20 October 2015 12:15

Under Sata the governing Patriotic Front (PF) was very leftist, but now Lungu is trying to be more supportive of business. Lungu also forged an alliance with the opposition Movement for Multiparty Democracy (MMD) in the presidential by-election in January, angering some PF supporters.

I have not welcomed her until she apologises publicly

Sources in the cabinet say that foreign affairs minister Harry Kalaba, information minister Chishimba Kambwili, energy and mines minister Christopher Yaluma and gender minister Nkandu Luo are all seen as ‘not-so allies’ who could be sacked.

Kambwili, who challenged Lungu to succeed Sata, is particularly upset that Sata critics like former information minister Dora Siliya, current education minister Michael Kaingu and sports minister Vincent Mwale have become influential since Sata’s death in October 2014.

Kambwili vehemently opposed Siliya’s joining of the PF in May. Siliya was a controversial member of the inner circle of former president and MMD leader Rupiah Banda. She had previously argued that Sata’s three-year rule was worse than the recent xenophobic attacks in South Africa.

The arrival of Lungu’s new allies has irked PF members. “If Dora can insult Mr Sata today, what will stop her from insulting President Lungu when he is out of office tomorrow? Personally, I have not welcomed her until she apologises publicly,” Kambwili said in May.

Lungu has also sidelined former vice-president Guy Scott. Scott had denied Lungu access to state resources prior to the 20 January elections because the constitution states that only the president and vice-president are entitled to state resources during electoral campaigns. Lungu’s backers say the decision almost cost him the election.

Besides balancing allies old and new, President Lungu has been focused on addressing Zambia’s economic problems. The price of copper, Zambia’s main export, has been falling this year, as have the economic prospects of its main export market, China.

On 1 July, the Zambian government reversed the taxation reforms introduced earlier in the year that removed the corporate tax for miners and increased the mineral royalty to 20% for open cast mines and 8% for underground mines.

After companies launched a strong lobby to reduce the royalties, the government reintroduced corporate tax and decreased royalties to 6% for underground mines and 9% for open cast mines. Despite this concession, mining companies say they have been hurt by the government’s failure to resolve a dispute over value-added-tax refunds that amount to about $600m.

The February appointment of central bank governor Denny Kalyalya, who introduced stringent monetary policy instruments not seen in Zambia in recent times, failed to stem the fall of the kwacha.

The local currency depreciated by more than 34% this year, making it one of the worst-performing currencies in Africa this year.

The collapse of the kwacha is due to the appreciating US dollar, the weakening Chinese economy, an acute shortage of power blamed on mismanagement of state-owned power utility ZESCO and low rainfall last season.

Lungu is unlikely to sack finance minister Alexander Chikwanda despite his inability to help the weaking economy. Chikwanda, a one-time ally of Sata, was very instrumental in Lungu’s election as PF president and paid his nomination fee. Under Chikwanda, 77, the government has overspent on road projects and bloated maize subsidies.

With less money in the government coffers, Lungu is facing strong headwinds as he looks for solutions to the economic slowdown and the fighting between his old and new allies. ●

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