President Hichilema’s Top 5 Economic Achievements
Hakainde Hichilema took the oath of office as Zambia's seventh president two years ago on August 24, 2021. Following a decade under the rule of Edgar Lungu’s Patriotic Front Zambia's economic and democratic standings had deteriorated considerably. The PF government had defaulted on its Eurobond debts in November 2020 (becoming the first country do so during the Covid-19 pandemic); corruption was widespread and the opportunities for democratic expression had been savagely curtailed. Hichilema’s win was, therefore, embraced by many Zambians as a ‘New Dawn’: an opportunity for economic recovery and to restore democratic ideals.
As the two-year anniversary of Hichilema being sworn in passes, how has the president and his government increased the stability of Zambia and promoted the country and its citizens to global investors?
This article looks back on Hichilema’s defining achievements in reforming and improving Zambia’s economic status.
5. Closer Engagement with the Private Sector.
The private sector generates jobs and income and plays a vital role in delivering infrastructure and social services for Zambia. However, when Hichilema entered office in 2021 Zambia’s investment landscape was perceived as largely unstable. Hichilema and his government have since worked tirelessly to assist the growth and development of the private sector.
In April 2022, the government unveiled the Public-Private Dialogue Forum (PPDF). This innovative conference mechanism has enhanced the role of the private sector within Zambia, accelerating economic advancement. The PPDF works by promoting collaboration between stakeholders and private sector companies.
Patrick Kangwa, Secretary to the Cabinet, emphasised how Zambia's private sector was being held back from its potential as a pivotal driver of economic advancement and how the forum acts to remedy private sector limitations through the systematic identification of constraints in Zambia’s market.
Since PPDF’s debut, the forum has introduced a National Arts Policy which provides creative infrastructure through nationwide centres such as the Lusaka Arts Contemporary Centre, to promote Zambia’s global artistic standing. Additionally, the forum has acquired US$1.3 billion for Zambia’s health sector for the period 2023 to 2025, enabling Zambia to carry out internationally ground-breaking research in the fields of sexual reproductive health, HIV and AIDS and mother and child health.
In March 2023, President Hichilema again tightened cooperation between the private and public sectors by creating the Presidential Delivery Unit (PDU).
The PDU works with existing resources in an accelerated manner, through strategic prioritisation of specific economic value streams. This optimises workflow by removing operational and logistical delays that have previously impeded progress.
Since entering office, the New Dawn government has frequently collaborated with global economic forces to improve the private sector. Notably, the government hosted forums with the European Union and China last year, in May and October respectively, to encourage investment and trade opportunities in Zambia.
As a result of these forums, the EU invested €110 million to advance education, health, and green energy in Zambia in 2022. Likewise, more than 600 Chinese businesses invested over US$3 billion in Zambia, increasing the bilateral trade volume between the two countries to $3.76 billion in the first half of 2022 - up nearly 40% compared to the previous year under Lungu’s administration.
4. Bolstering investment in the mining sector
Mining is a crucial engine for Zambia’s economy, with copper trade alone accounting for over 60% of the country’s exports. President Hichilema has the clear objective of increasing the country's copper production. His goal is to triple the current output, which means expanding it from 800,000 tonnes per year to 3 million tonnes within a decade.
In 2023, Hichilema’s consistent work towards repairing global trust in Zambia’s mining industry manifested in two major investments from companies which previously held doubts about the stability of the market.
In July, Vedanta Resources regained control of Zambia's Konkola Copper Mines (KCM) signalling a restored partnership between the Zambian government and Vedanta after the relationship broke down under Lungu’s administration which culminated in a state take-over of the KCM assets and forced liquidation in May 2019. Vedanta has promised to increase investment and execute new social responsibility programmes.
Similarly, Barrick Gold announced in 2022 that it will be transforming Zambia’s Lumwana copper mine into a Tier One asset, a move which will significantly help the government to reach their target of 3 million tonnes. Amazingly, this increased investment comes after the gold giant prepared to sell the copper mine in 2019 due to tax changes under PF’s government. In an interview discussing the mine, Barrick president and chief executive, Mark Bristow, stated that “We all agree that President HH has brought a certain stability to the country, he has definitely made the country more investable”, a comment which emphasises a renewed global faith in Zambia’s economy and government.
On top of restoring and improving previous partnerships, Hichilema has attracted new business partners to the mining sector who have bought innovative new technology to Zambia. In July this year, the Silicon Valley start-up KoBold Metals embarked on a $150 million exploration project in Chililabombwe.
The company employs pioneering artificial intelligence technology to guide drill placement. KoBold's investors include Breakthrough Energy Ventures, a climate and technology fund co-founded by Microsoft's Bill Gates and backed by Amazon's Jeff Bezos and Virgin's Richard Branson, reflecting a trend of non-traditional mining investors addressing the global copper shortage driven by a transition to cleaner energy sources.
3. First Quantum Minerals Deal
Out of Hichilema’s mining successes, the most significant deals from his time in office are undoubtedly with First Quantum Minerals (FQM), a global mining company with operations in nickel, gold, and cobalt.
In July, FQM officially commenced production at their Enterprise nickel mine situated in the Zambia’s North-western Province. The mine is expected to upscale annual production to nearly 30,000 tonnes of nickel over the next two years, making Zambia the continent's largest producer of the metal used in making batteries for electric vehicles, the company told reporters.
Furthermore, FQM have publicly acknowledged Hichilema’s efforts to restore the stability of Zambian investment, with the company attributing their $1.25 billion expansion at Kansanshi Copper Mine to a “renewed confidence” in Zambia's economic climate due to the governance of Hichilema and his party.
Subsequently, the Kansanshi mine has emerged as the largest copper producer in Africa, contributing significantly to the socio-economic landscape by generating over 13,000 jobs for the local Zambian populace. As part of its commitment to the community, FQM is also providing 6,000 free school lunches and protecting nearby wildlife reserves.
These increases will soon make Zambia the largest producer of the metals needed to manufacture batteries for electrical vehicles, a prospect which aligns with the government’s intention to become a major player in the emerging market of EV batteries.
2. Powering an electric future
The International Energy Agency anticipates that the demand for lithium will be forty times higher, graphite twenty-five times higher, and nickel and cobalt approximately twenty times higher in 2040 than in their respective levels during 2020. This will primarily be driven by the manufacturing of clean energy technologies, such as batteries for electric vehicles (EVs). Zambia, as a leading producer of critical metals, has entered into an official partnership with neighbouring Democratic Republic of Congo (DRC) to bolster and elevate the EV industries of both nations.
Last year, the United Sates signed a memorandum of understanding (MoU) with DRC and Zambia to strengthen electric vehicle battery value chains. The MoU affirms the US’ commitment to upholding the United Nations’ standards for preventing, detecting, and addressing corruption at every stage of the supply chain.
Development continued this year in April when African Export-Import Bank (Afreximbank) and the United Nations Economic Commission for Africa (ECA) signed a framework agreement with DRC and Zambia for the establishment of special economic zones for the production of electric vehicles and batteries as the continent looks to add value to surging demand for its critical minerals.
Zambia’s cooperation with DRC is important as the two countries have major reserves of some of the critical minerals needed to produce batteries for electric vehicles and other technologies key to the green energy transition. The DRC accounts for approximately 70% of global cobalt supply and 88% of cobalt exports. Together, the two countries hold 11% of the world’s copper, as well as significant reserves of lithium.
To date Zambia and the DRC have largely served as exporters of these critical raw materials to foreign manufacturers. Now however, Afreximbank and ECA will lead the establishment of an operating company in consortium with public and private investors and Afreximbank’s impact fund subsidiary, the Fund for Export Development in Africa. This new company will develop facilities dedicated to the production of battery precursors, batteries, and electric vehicles within special economic zones in Zambia and the DRC. This will ensure a shorter supply chain for businesses and more, better paying jobs for the people living nearby.
1. ‘Historic’ Restructuring of Zambian Debt
The heavy impact of high interest loans acquired by President Lungu’s government has so far constrained Hichilema’s ability to develop social programs and crucial infrastructure, which are key factors driving economic growth. By restructuring its Eurobond debt, the New Dawn government has reduced the burden of debt repayment, allowing it to reimburse creditors over an extended period or with reduced interest rates.
In June, the government of Zambia confirmed that an accord had been reached with its official creditors for the restructuring of a total of USD 6.3 billion in loans. The terms of the arrangement entail the implementation of a three-year grace period, during which only interest payments will be required, alongside an extension of the loan maturities to a duration exceeding 20 years. The deal was hailed by French President Emmanuel Macron as ‘historic’.
The debt restructuring has eased Zambia’s debt service burden and has the potential to significantly enhance the country’s monetary and fiscal stability and help revive capital inflows.
Following Zambia's successful negotiations with bilateral creditors to restructure debt in June, the country returned to the process of bond restructuring, this time with 15 European and U.S.-based institutions who collectively held around 45% of Zambia's Eurobonds.
This restructuring allows the Zambian government more fiscal space to operate in and increases the reserves available to invest in crucial developments and social expenditure. This increased budget directly contributes to the lives of Zambian citizens with advancements in transport, agriculture, and health, all improving the country’s economic landscape, and therefore enabling more people to rise above the poverty line. Moreover, small and medium businesses in Zambia are granted greater accessibility to venture capital funding, resulting in higher levels of Zambian profit.