A new report on Zambia says Plans by Konkola Copper Mines—one of Zambia’s largest copper producers—to lay off 2,000 workers (around10% of its workforce) have highlighted the cost and price pressures facing the mining sector.
The Economist Intelligence Unit report for June 2013 also says president Sata will continue bullying the opposition until the next elections in 2016.
The report says the PF’s performance so has been bad, voters are disappointed, the Kwacha will depreciate, and foreign reserves will dwindle while relations with western countries may break.
The reports further says the Energy Regulation Board’s approval of a 21% increase in fuel prices has stoked inflation, sparking protests by university students against the government’s decision to eliminate the 5% fuel subsidy.
‘The direct impact of any retrenchment on the Zambian economy would be limited—KCM does not plan to cut production or investment—but the indirect economic consequences and political implications would be significant’ says the report.
The Economist Intelligence believes that Political stability will be maintained, but this will be marred by sporadic unrest as the government continues to antagonise the opposition and voters remain dissatisfied with its slow progress in meeting its campaign promises.
‘Despite voter dissatisfaction, the president, Michael Sata, and the Patriotic Front (PF) will remain in power at least until the next elections, in 2016,’ reads part of the report.
It says the government will focus on boosting mining revenue, supporting local investment and reducing unemployment.
‘However, it is prone to imprudent policy moves, which would undermine these goals.
‘The kwacha is forecast to depreciate by an annual average of 3.6%, to an average of ZK6.14:US$1 in 2017, as strong growth in foreign investment and exports is offset by robust import demand and a strong US dollar,’
‘The current-account position is expected to deteriorate in 2013 as imports grow rapidly; to improve in 2014-16 as production of copper—the country’s main export—rises sharply; and to weaken in 2017 as export growth slows,’ says the report.
The next elections, due in 2016, are expected to be free and fair, although the run-up to voting will be marred by bias in the state-owned media and the incumbents’ use of public resources to fund their campaigns. Some election-related violence is On 22016 election, the reports says the result of the elections will depend on whether the PF lives up to its campaign pledges—its performance so far has been unimpressive.
The report further observes that if the new constitution is adopted before elections the “first past the post” system discarded in favour of 50+1 of the vote it would limit the benefits to the ruling party from a fragmented opposition.
On international relations, the report says the PF regime will remain in good books with china.
‘Relations with Western donors could deteriorate if the government’s heavy-handedness towards the opposition were to worsen, creating the risk of aid cuts. ‘Zambia is expected to remain largely on good terms with other countries in the region. These relationships will be supported by its membership of two regional trade blocs: the Common Market for Eastern and Southern Africa (Comesa) and the Southern African Development Community (SADC).’