Possible trouble ahead – EIU

THE Economist Intelligence Unit has warned that there will be unrest in Zambia if the Constitutional Court rules that President Edgar Lungu is eligible to stand in 2021.

And the EIU says despite the release from prison of Zambia’s main opposition leader Hakainde Hichilema in August, there will be several trigger-points in 2018 for further unrest that will leave stability fragile.

Meanwhile, the Unit has projected that Zambia will face substantial threats to political stability between 2018 and 2022.

According to a country report on Zambia for 2018 to 2022 released yesterday, the EIU stated that there was more serious unrest likely to happen in Zambia that could trigger re-invocation of the state of emergency, citing the pending ruling of the ConCourt on President Lungu’s eligibility case.

“Over the longer run, there are several potential flashpoints that stand to stir more serious unrest and provide justification for the re-imposition or extension of emergency powers. Such unrest is likely to be triggered, for example, if the judiciary were to deem Mr Lungu eligible to stand for another term in office in 2021—something the opposition roundly rejects,” the EIU report highlighted.

“The 2021 election season will be another volatile period, during which the government will look to narrow the political space aggressively. Extra security powers should help to bolster overall stability, but they will nonetheless reinforce widespread perceptions that Zambia is staggering into autocracy, keeping tensions very high throughout the forecast period and resulting in frequent low-level clashes and violence. Besides relations with the opposition, intra-governmental divisions will keep policy unpredictable, with a vocal conservative faction of the ruling Patriotic Front (PF) having long been sceptical of the president and his choice of Cabinet. To cement his position, Mr Lungu is likely to enact a purge against this caucus, which will prove a distraction to the functioning of government while it lasts, but later on it should work to avoid internal instability – for example, in the run-up to the 2020 PF presidential nomination.”

The report further noted that threats to the country’s stability would mostly stem from “what is for Zambia an unusual degree of tension under the presidency of Edgar Lungu.”

“Treason charges against Hakainde Hichilema, the leader of Zambia’s main opposition party, the United Party for National Development (UPND), have been dropped, but only under a nolle prosequi, which means that the prosecution will proceed no further but that he can be rearranged at any time. Mr Hichilema has also reiterated his commitment to overturning the results of the 2016 general election (which the UPND claims was fraudulent), even though these claims are the most likely reason why he was charged with treason in the first place,” the EIU report stated.

“The Commonwealth, a multilateral organisation, has brokered talks between Mr Hichilema and Mr Lungu, but in the absence of any common ground over the 2016 election, these are unlikely to succeed.”

The EIU further projected that in the short term, recent political tensions would cool following the release from prison of Hichilema, the UPND leader.

“But there are several trigger-points for further unrest, leaving stability fragile throughout the forecast period,” the report stated.

It further noted that emergency security powers under Article 31 of the Constitution have expired without extension by President Edgar Lungu, “who made the decision unilaterally.”

“Article 31 was initially invoked following a large fire that the authorities suspected was caused by politically-motivated arson. A debt management strategy paper released by the Ministry of Finance reveals plans for domestic public debt to comprise 60 per cent of the total stock over the medium term, with the remainder external. This is up from an officially estimated ratio of 45:55 currently,” it stated.

It also noted that the expiration of the 90 day threatened state of emergency that was declared by President Lungu on July 5 would bring about calm over the short term but that there would be low-level anti-government protests over corruption, “which will be a frequent phenomenon.”

The EIU stated that real Gross Domestic Product (GDP) growth would average 3.6 per cent a year in 2018-22, mainly on the back of a relatively strong copper price outlook.

“Although there will be volatility in global commodity markets and varying levels of business confidence. Inflation will settle at an annual average of 6.7 per cent in 2018-19, on the back of currency stability. The rate will then average 8.3 per cent in 2020-22, amid a weaker exchange rate and periodic rises in the global oil price,” it stated.

“The current account balance will move from an estimated deficit of 2.1 per cent of GDP in 2017 to a surplus of 0.6 per cent of GDP in 2019 as exports rise. It will then return to a deficit in 2020-22 as copper prices fall to relatively lower levels…The government will adopt an economic policy of austerity with the scrapping of consumer subsidies, most notably for electricity, while protecting pro-poor spending under a loan facility with the IMF. Monetary policy will be loosened in 2018 as inflation remains well within the central bank’s medium-term target range, followed by a period of stasis and then tightening in 2021-22 as price pressures rise.”

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