Mon. Dec 6th, 2021

Hakainde Hichilema was detained four years ago A Zambian jailer accused of high treason. Now he intends to save the Southern African nation from financial ruin.

Nearly 100 days into his presidency after beating the man who put him in jail, former leader Edgar Lungu, in a big election victory, Hichilema faces the task of turning around the resource-rich but almost bankrupt country. The president aims to reduce corruption and increase copper production in an effort to win over bond investors and the IMF.

“If you see what I see now, you would fall off your chair,” Hichilema said in an interview with the Financial Times in London on his way back from the COP26 climate talks, referring to what he claimed was corruption in the previous administration. “The treasury we inherited was completely empty.”

Last year, Zambia, Africa’s second largest copper producer, the continent’s first country to fail since the inception of Covid-19 after skipping payments on U.S. dollar-Eurobonds.

Out of the country’s nearly $ 15 billion in debt, including arrears, Hichilema’s government recently revealed that the share is owed to Chinese creditors was $ 6 billion, about double what was previously known. This has raised concerns that there may be more hidden debt and the risks complicate negotiations with creditors and the IMF. The new government wants to sign a lifeline with the fund by year end.

Billions of dollars have been stolen through excessive spending and refunds on construction projects, as well as corrupt fuel and fertilizer subsidy schemes, he said – accusations that his predecessor denied. Hichilema’s government has sought to recover stolen assets and curb procurement practices that have seen significant increases in road prices from road works to stationery supplies in the past, he said.

The Mopani copper mine.

The Mopani copper mine. Zambia brought a majority stake in the mine from Glencore this year © Anders Pettersson / Getty

Private creditors sought transparency about the debt before renegotiating payments; they have previously expressed concern that any concessions they make could be used to pay off Chinese borrowers.

Hichilema said refusing to negotiate was no longer viable after the change of government. Private creditors, he said, “have no choice. You can not boycott and expect a solution, especially if your teeth were already in the cattle, ”he added, referring to creditors who were willing to finance the Lungu administration. “You lent to a land that was troubled.”

Debt restructuring talks have already begun with both private creditors and China, he said after meeting with Eurobond creditors in London. “We will treat debt shareholders fairly to avoid cross-subsidization,” he added, assuring that money given up by one set of creditors will not be used to pay another.

Cash is scarce after the Lungu administration spent heavily on subsidies in the run-up to August’s election, which increased the fiscal deficit to more than 10 per cent of gross domestic product. Hichilema last month presented a budget that is seen as the basis for an IMF agreement.

The budget aims to sharply cut the deficit to 6.7 percent this year, eventually moving into surpluses. “This is part of the precautionary measures we ourselves need. “We do not need the IMF to tell us to save money,” he said.

Part of his solution is to divide spending to local authorities. “We take money from a small clique of thieves [the capital] Lusaka and send it to the local communities, ”he said. “Devolution, decentralization have been talked about since independence. No government has had the courage to do that, but we are doing it. “

Jimmy Maliseni of the Alliance for Community Action, an anti-corruption watchdog, said he agrees in principle with devolution. “Our concern is more about how it is activated,” he said.

Hichilema, whose victory came after five unsuccessful runs at the presidency in August, was charged with high treason in 2017 after his motorcade overtook Lungu’s presidential convoy on its way to a ceremony. Security forces violently raided Hichilema’s home and put him in jail for more than two months during which, he claims, there was an assault on his life.

Its fiscal juggling action was eased by a higher copper price, which rose to a 10-year high. recently exceeded $ 10,000 per tonne. The government is aiming for 3.5 percent GDP growth in 2021 after a contraction of about 3 percent by 2020.

Hichilema opposed calls for a windfall tax on mining. An ambitious target of nearly quadrupling annual copper production from the current 880,000 tonnes depended on reassuring investors that Zambia offers an attractive and reliable business environment, he said.

But Hichilema is under pressure to withdraw more revenue from the sector and open it up to greater opportunities for Zambians, said Trevor Simumba, an economist.

“The government should also have emphasized the [mining groups] that they should contribute much more, especially with the price of copper where it is. “The mines are making windfall profits, and it will only be fair for Zambia to take advantage,” Simumba said.

Despite his personal history with the previous administration, Hichilema said he would not pursue a vendetta. “We want to restore the rule of law. “We do not want to continue the bad behavior of our predecessor,” he said. “We do not want revenge.”

That did not mean members of the Lungu administration, including the former president, were immune from possible prosecution, Hichilema added.

“We must not mistake it with impunity. “We have no tolerance for corruption,” he said. “No one should be mistaken for what we say. Where there is a need for someone to be prosecuted, they will be prosecuted. ”

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