Sunday, April 01, 2018 /05:19 AM/BMI Research
BMI View: Political tension will continue to recede in Zambia in the near term, after the government refrained from extending the so-called State of Threatened Public Emergency, initially put in place in July. However, an erosion of Zambia's democratic norms has increased longer-term political risk, heightening the potential for significant social unrest over a multi-year period.
Political tensions in Zambia are likely to continue to cool following the August 16 release of opposition leader Hakainde Hichilema and the October 12 decision by the government not to extend the State of Threatened Public Emergency. However, the actions of the government in 2017, including Hichilema's incarceration and the suspension of 48 opposition MPs in June, suggest a longer-term risk to political stability. Namely, while Zambia has long benefitted from a stable political environment, with strong democratic institutions and norms, their erosion increases the risk of bouts of social unrest in the years ahead, as parts of the population may begin to believe that their political preferences may not be reflected at the ballot box. The risks will be particularly acute in the run-up to the 2021 presidential election. As such, in the near term the impact on investor sentiment will be limited, but should we see the emergence of significant social unrest risk this could weigh on foreign direct investment over the longer term.
End Of The Threatened State Of Emergency Will Reduce Short-Term Political Risk
In the months ahead, we believe that heighted political tension in Zambia is likely to continue to cool. The State of Threatened Public Emergency, which is allowed by Article 31 of the Zambian constitution, was declared by President Edgar Lungu on July 5 in the aftermath of the burning down of Lusaka City Market and approved by the Parliament on July 11. It gave Lungu the right to ban public gatherings, impose curfews, curtail parliamentary debate, ban publications and search properties without warrants. The enactment of Article 31 was seen by many members of the opposition United Party for National Development (UPND) as an attempt by the ruling Patriotic Front party to crack down on dissenting voices, especially after the arrest of UPND leader Hakainde Hichilema for treason in April. However, the decision by the president to allow the state of emergency to lapse in October, especially following Hichilema's release from prison on August 16, suggests we are heading for a cooling of political tensions in the near term.
Zambia's Democratic Principles Are At Risk in the Longer Term
That said, we believe that the events of the last 12 months have damaged popular domestic perceptions of the strength of Zambia's democratic norms and the country's separation of powers. Lungu has shown that he is capable of using instruments of state to undermine the opposition, and despite recent steps to cool tension, we believe there is a risk he may be willing to do so again. This could heighten popular unrest, especially amongst opposition supporters if they feel that the legitimate democratic channels to express their grievances have been undermined, and risks triggering protests and social unrest, especially surrounding future elections. Moreover, continued heavy focus on the tribalisation of politics will also increase the scope for political unrest. Elections in Zambia have long tended to be decided along regional and tribal lines. However, these divisions came to the fore in the most recent election.
In 2016, the PF attacked the UPND and its leader Hakainde Hichilema for the party's continued close affiliation with the Tonga tribe. At the same time, the ruling party used the fact that Lungu was not part of the Bemba tribe (the tribe with historical affiliations with the PF) as a key campaign argument to argue that he was a more neutral candidate. Tensions between tribes rose to the point that in October 2017, Lungu declared he would stop attending traditional ceremonies as his presence is fuelling national divisions. Overall, while there has been limited negative impact on investor sentiment from recent events, we do see long-term risks to political stability as likely to linger, potentially impacting foreign business investment in the Zambian economy in the future. These factors lead us to assign Zambia a score of 53.2 in our Long-Term Political Risk Index, which positions the country at the lower end of the scale in the Southern Africa region.