• New President Hakainde Hichilema was inaugurated on August 24, 2021, after a landslide win over incumbent Edgar Lungu in the August 12 presidential election. Lungu’s PF party also lost its parliamentary majority to Hichilema’s UPND. Lungu’s loss was borne of growing opposition to his alleged human rights abuses, corruption, and economic mismanagement. Particularly given his growing authoritarianism—and unrest in the last election—the handover was more peaceful than expected, helped by his clear defeat.

• The kwacha, which lost 33.4% of its value over 2020 amid the pandemic and a eurobond default in November, surged 17% between Hichilema’s win and the end of August, as the increased likelihood of a fast-tracked IMF deal under the new president boosted foreign investors’ confidence.

Our view: The peaceful handover speaks well to Zambia’s institutions and may signify a return to its stable image, which had been undermined by Lungu’s administration. Alongside this and the improved likelihood of a fast-tracked IMF funding and reform program, Hichilema’s vows to tackle corruption and economic mismanagement are positive for the outlook and foreign investment. The private sector—particularly mining, trade, manufacturing, and agriculture—is set to benefit from this. From a government demand perspective, health and education will likely be prioritized, but overall public sector demand will be curtailed, growing 1–2% YOY over the next few years, amid IMF-supported reforms aimed at restoring macroeconomic stability and rehabilitating the country’s debt. Additionally, an improved currency outlook augurs well for hard-currency returns and lower inflation (forecast at 12% in 2022, down from 21% YOY in 2021)—in turn, benefiting business planning and customer purchasing power.

Business Implications: MNCs should review their assumptions and goals for the market and incentivize local partners to track new opportunities emerging in sectors benefiting from rebounding investor sentiment. Firms selling to the public sector should ensure they position their products as long-term, cost-saving solutions for the financially constrained government.