Zambia’s Hichilema win gives investors continuity, now they want growth

Zambian President Hakainde Hichilema’s re-election hands investors the policy continuity they sought, while negotiations on a new IMF programme provide an early test of whether a second term can turn economic stabilisation into sustained growth.

The copper producer is emerging from years of economic turmoil after becoming the first African sovereign to default during the Covid-19 pandemic in 2020. Hichilema’s first term was dominated by a lengthy debt restructuring and IMF-backed reforms , while drought, power shortages and a weak currency tested the recovery.

Results released by the election commission in the early hours of Tuesday showed Hichilema received about 60% of valid votes compared ​with 38% for his main challenger Brian Mundubile.

“For investors, Hichilema offers continuity,” said Stuart Culverhouse, chief economist and head of fixed-income research at Tellimer. The challenge now will be to build on gains in macroeconomic stability, lower inflation and fiscal discipline while accelerating growth and investment, he said.

“His government has already said they would seek a new IMF programme if re-elected, so that may be the first test for investors.”

Zambia’s 2033 dollar bond, the country’s sole international bond, was bid at 97.72 cents on the dollar on Tuesday, broadly unchanged despite a weaker backdrop for African debt markets.

The southern African nation aims to secure a new IMF programme by year-end after its previous $1.7bn (R27.57bn) arrangement expired in January. Finance minister Situmbeko Musokotwane said before the election that fresh investment was needed to drive growth and create jobs but added it was still too soon for Zambia to return to international bond markets as the government seeks to cement its relationship with the IMF.

Investors say an eventual Eurobond issuance could help attract foreign capital.

“If they were to reissue debt in the international market, that would also be a good thing because it would give the companies in the country a benchmark to price debt off,” said Philip Fielding, portfolio manager at Fidelity International.