Zambia's Success Fails to Ensure Mwanawasa Victory 2006-09-27 05:28 (New York)
By Paul Richardson
Sept. 27 (Bloomberg) -- Zambian President Levy Mwanawasa, 58,
has presided over economic growth in excess of 5 percent, almost
eliminated the country's foreign debt and slashed inflation. It
may not be enough to win him re-election tomorrow.
Rival candidate Michael Sata, 68, is tapping into popular
resentment against foreign investors, particularly Chinese, amid
anger over low pay and dangerous working conditions. The first
election results will come in at midnight tomorrow, with the final
results announced by midday on Sept. 29.
Mwanawasa's policies have included a 15-year tax holiday for
mining companies, helping to attract $1.65 billion in investment
to the copper and cobalt industries since 2000. By contrast,
Sata's Patriotic Front plans to limit foreign ownership to 51
percent of any project, impose a windfall tax on copper mining
companies and may prevent Chinese taking over local shops.
``There are two diametrically opposed policy platforms,''
Leon Myburgh, sub-Saharan Africa specialist at Citibank in
Johannesburg, said in a telephone interview Sept. 22. ``While
Mwanawasa has seemingly brought good economic policies to Zambia,
it doesn't appear as though the man in the street has benefited,
which Sata has capitalized on with a raft of populist policy
promises.''
The economic policies of Mwanawasa's Movement for Multiparty
Democracy helped persuade the International Monetary Fund, World
Bank and the African Development bank to write off much of the
country's foreign debt. The debt has fallen to $502 million from
$4 billion at the end of December last year.
The inflation rate has also fallen, dropping below 10 percent
for the first time in 30 years. Consumer prices rose 8.7 percent
in the year through July. The economy expanded 5.1 percent in 2005
and the IMF has forecast growth of more than 6 percent this year.
Opinion Polls
Mwanawasa is only Zambia's third president since independence
from the U.K. in 1964. Kenneth Kaunda ruled for the first 27
years, followed by Frederick Chiluba until 2002. Opposition
parties have complained of vote rigging.
According to a poll by the University of Zambia conducted
between Aug. 15 and Aug. 19, Sata will win 52 percent of the vote,
compared with 27 percent for Mwanawasa. The poll had a margin of
error of 5 percentage points.
A survey by the Steadman Group, a Nairobi-based market
research company, gave Mwanawasa 33 percent and Sata 24 percent.
That poll, conducted Aug. 11 to Aug. 19, had a margin of error of
2 percentage points. Both polls questioned 2,000 people.
Kwacha Weakens
Investor concern Sata may win the election led the Zambian
kwacha to weaken to an 11-month low of 4,425 against the dollar on
Sept. 14 from 3,020 on May 11. It has since rebounded to 3,900.
The kwacha was Africa's best-performing currency last year.
``The kwacha has been very sensitive to developments on the
political front,'' Myburgh said. ``A Sata victory will be
associated with greater uncertainty and will be detrimental to
investor confidence.''
Support for Sata has risen from the 3.35 percent he won in
elections in December, 2001, on growing discontent about the
country's 50 percent unemployment rate, the fact that more than
two-thirds of Zambians live below the poverty line and criticism
of Chinese mine owners.
An explosion in April, 2005, at Chambishi Nonferrous Mines
Ltd., owned by China Nonferrous Metal Industry's Foreign
Engineering and Construction Co. Ltd., killed at least 32 people.
Workers at the mine staged a strike three months later over pay
and to demand the creation of a labor union.
Chinese firms have invested more than $300 million in copper
mines and other industries in Zambia, according to China Mining's
Web site.
`Popular Frustration'
``Sata's rise to prominence has been driven by his amazing
ability to harness popular frustration with poor working
conditions and low wages paid by Chinese mining companies,'' said
Chris Melville, central Africa analyst at Control Risks Group in
London.
Sata's Patriotic Front plans to limit foreign ownership of
local assets to 51 percent and may impose a windfall tax on copper
mining companies, Guy Scott, the party's secretary general, said
in an interview Sept. 21. Sata said on Aug. 28 that he may ban
Chinese traders taking over local shops.
``Anybody who exports anything from Zambia, money has to come
back to Zambia,'' Sata told a rally yesterday. ``If it comes from
Zambian soil, the Zambians must enjoy. If they don't want Zambians
to enjoy then they must go and dig copper in their own
countries.''
Since Mwanawasa came to power in December, 2001, the price of
copper, which generates 53 percent of the nation's export
earnings, has increased fivefold.
Mining Companies
Mining companies operating in the country include London-
based Vedanta Resources Plc, owner of Konkola Copper Mines Plc,
Africa's biggest copper producer, Vancouver-based First Quantum
Minerals Ltd. and Baar, Switzerland-based Glencore International
AG. Equinox Minerals Ltd., based in Perth, Australia, is digging
Africa's biggest copper mine in Zambia at cost of $415 million.
``Zambia is a vibrant democracy with real elections and
candidates can and will say many things that might appeal to the
electorate,'' Kevin van Niekerk, vice president of investor
relations and corporate development at Equinox, said in an e-
mailed statement Sept. 21.
The question is, will Sata follow through with his election
pledges if he wins, said Melville.
``As we know from any number of other examples around the
world, politicians often make promises and then drop them after
elections,'' Melville said.
--Editor: Sanders |
