Can a career businessman and management expert turn around Zambia's grim economic trajectory?
On his sixth attempt, Hakainde Hichilema, 59 and the richest person in Zambia, finally won the presidential election on August 12 in Africa’s second-largest copper-producing country.
The landlocked nation was the first on the continent to register a pandemic-era default on a sovereign debt payment in late 2020, when it missed a $42.5 million interest payment on a portion of its $3 billion dollar-denominated bonds.
The outgoing administration of President Edgar Lungu had accumulated massive debt in recent years, much of it for large-scale infrastructure projects, and was discussing new financing with the International Monetary Fund (IMF), which hadn’t extended a loan to the nation since 2008.
Zambia’s economic forecast remains grim. By the close of 2020, Zambia’s inflation rate had soared to 17.4%, the highest in four years. Its level of debt is hovering around $12 billion, half of which comes from private creditors, including $3 billion in international bonds and large loans from Chinese state-owned lenders.
The country last issued a eurobond in 2015, before its debt started spiraling out of control, with many of the country’s infrastructure projects financed by Chinese loans as part of Beijing’s sweeping Belt & Road initiative.
Considered to be market friendly, Hichilema has had an illustrious career as a business and management expert, culminating in CEO positions at international auditing firms Coopers & Lybrand and Grant Thornton. He’s expected to reach a deal with the IMF for a $1.3 billion loan that will reduce debt and boost economic growth.
Unlike Lungu’s Patriotic Front political party, which had for years sought to avoid an IMF program, Hichilema’s United Party for National Development has shown a desire to tackle the nation’s debt problems and engage with investors.
Investors may see a potentially clearer path to an IMF program and a debt restructuring under Hichilema.