Resource Nationalism and Democracy Zambia

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Sata2Michael Sata’s election as Zambian president has raised questions about the potential tension between democracy and economic growth. Will the success of one of Africa’s most prominent populist leaders result in ill-considered policies as he scramble to meet the numerous promises made to the electorate during the campaign? And will these decisions precipitate a fall in investor confidence, and a slide towards economic stagnation? Here, Kathryn Brooks of the Africa Practice, offers her view…

Zambia’s 2011 election was a great success for democracy but the new government is currently creating considerable noise and turbulence whilst trying to establish itself. Investors, and in particular mining investors, are facing heightened uncertainty in one of Africa’s historically more stable countries as Sata, a.k.a King Cobra, takes on the challenge of balancing vote-winning populist rhetoric from intended policy goals and at the same time managing the expectations of the his support base.

Across the African continent calls for resource nationalism and the introduction of measures by government to secure greater benefits and value from extractives operations have recently come to the fore. High demand for minerals and the influx of investors – old and new – have put governments in a better position to manage such negotiations. However, the debate on how best to capture these benefits while maintaining an attractive operating climate for investors is playing out differently in each country. Following Sata’s election this debate has been centre stage in Zambian politics. Its resolution will determine the country’s long-run socio-economic trajectory.

Democratically elected governments are always under pressure to deliver on nationalist manifesto commitments relating to resource management. This demand for ‘quick wins’ can drive governments to consider short-term, interventionist policies to plug funding gaps. Sata for one has made grand promises on a number of fronts and is already feeling the pressure to deliver these by 2016. There is a clear need for the government to demonstrate to key voter constituencies that they intend to secure greater benefits for Zambians as promised. The extent of ensuing policy reforms will be affected by internal dynamics within the Patriotic Front (PF) and relations with prominent civil society actors, and moderated by a preference for pragmatism when it comes to action.

We already know that Sata does not intend to keep all of his campaign promises, as demonstrated by his u-turn on the Barotseland Agreement question, nor can he without significantly increasing government revenues. The coming months will reveal which pre-election statements reflected Sata’s actual intentions and which were merely political expedient. Sata’s ability to navigate the situation whilst retaining political and popular support will present an immediate test of his presidential skills – we can speculate that while Sata’s style and character perfectly suits the populist opposition candidate it less easily fits within a presidential profile. As the government moves beyond its honeymoon period it is likely that he will adopt a more pragmatic approach. However, the government may look to secure its popularity at the cost of one or two investors which will present a source of uncertainty for some time to come. Whether the reversals of the Zamtel and Finance Bank of Zambia deals will suffice in this respect remains to be seen.

As power in Zambia has once again been transferred through the ballot box we are reminded that ultimately industry needs the support, or at least acceptance, of the electorate to guarantee their license to operate, particularly where populist platforms dominate.

Click here for the full report from Africa Practice, Zambia: Mine Games

Click here for our recent post about possible democratic backsliding in Zambia

Click here for our recent post about trade unions and democracy in Zambia

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