Incumbent President Edgar Lungu defeated by almost 1 million votes concedes defeat just as Eurobonds surge after landslide win for Hichilema
Zambia’s Eurobonds gained the most in 14 months and the kwacha surged after opposition leader Hakainde Hichilema’s shock landslide victory in the nation’s presidential election.
Platforms Africa reports that Hichilema beat incumbent President Edgar Lungu by almost 1 million votes and nearly 60 percent support, the biggest margin of victory in a quarter century and an even better performance than his party projected.
The margin of victory provides Hichilema with a strong mandate to take on reforms needed to revive an economy wrecked by years of overspending that culminated in the nation becoming Africa’s first pandemic-era sovereign defaulter in November. Annual inflation is at the highest in two decades at nearly 25 percent, and the economy is forecast to only narrowly avoid a second consecutive contraction this year.
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The president-elect will also need to reach a deal with the International Monetary Fund for a bailout, and repair relations with copper miners operating in Zambia, Africa’s second-biggest producer of the metal.
Zambia’s $1bn of Eurobonds due in 2024 jumped 8.7 percent to 72.1 cents on the dollar by 10:47 a.m. in London, the biggest gain since June 2020. The kwacha surged the most since November 2015 to 9.3150 per dollar, Bloomberg reported.
‘The elections and the political uncertainty so far weighed on a successful restructuring deal with the IMF,’ Lutz Roehmeyer, chief investment officer at Capitulum Asset Management GmbH in Berlin, who holds local and dollar-denominated Zambian debt, told Bloomberg. ‘Now we have hopefully a smooth transition of power and a government that can sign a deal.’
Bailout deal
Hichilema, 59, said he plans to seal a bailout from the IMF as soon as is technically possible and initiate debt-restructuring talks. The businessman and cattle rancher is targeting an economic growth rate of more than 10 percent within five years, mainly by growing the mining, agriculture, construction and manufacturing industries.
Known as HH, Hichilema has an economics degree as well as an MBA from the University of Birmingham in the UK He unsuccessfully contested the nation’s previous five presidential elections, and was jailed for four months on treason charges in 2017 after his convoy of vehicles refused to make way for Lungu’s.
‘Hichilema is considered more market friendly,’ said Anders Faergemann, a money manager at PineBridge Investments in London. ‘There is a higher chance Zambia will be able to land a deal with the IMF under his leadership.’
Lungu, who won power in 2015, said at the weekend the election was tainted because of violence in three provinces where Hichilema performed the best. He’s yet to concede defeat.
State security has taken over protection of Hichilema’s private residence in the southeast of Lusaka, the capital.
Zambia stands out in the region, having changed governments democratically twice since the late Kenneth Kaunda’s rule ended in 1991. The Patriotic Front won power in 2011 under Michael Sata’s leadership, and Lungu was elected in 2015 following Sata’s death while in office.
Near-record prices for copper, which accounts for more than 70 percent of Zambia’s export earnings, will boost Zambia’s coffers. Another plus is a $1.3bn transfer from the IMF due this month – separate to the talks Zambia’s in with the fund for a similar amount – that will almost double the nation’s foreign-exchange reserves.
