Domestic Politics

The supreme court removed the last uncertainty hanging over Levy Mwanawasa's presidency when it dismissed the opposition petition to nullify the electoral victory of 2001. On 16 February, the court ruled that only six of the 36 allegations of vote rigging and fraud had been partially proven, but that there was insufficient evidence to nullify the vote in total. Hence, the verdict ended a court case that had dragged on for three years and finally endorsed President Mwanawasa as lawfully elected. Opposition leaders were infuriated. They accused the judges of graft – judicial salaries were increased by the president during the hearing – but despite some menacing utterances no violence occurred.

Legitimised in office, Mwanawasa turned to bolstering his leadership position in his severely factionalised party, the Movement for Multi-party Democracy (MMD): since 2002 he had been only the acting president of MMD. A party convention had been overdue for a number of years and finally took place in Kabwe from 13 to 17 July. This national meeting was turned into a pre-election convention for the 2006 elections. Delegates voted overwhelmingly for Mwanawasa, who defeated his only remaining contender, Enoch Kavindele, by 1,211 to 68 votes. With this result, Mwanawasa also became the MMD candidate for the 2006 presidential elections. The widespread allegations of corruption that characterised the election of delegates, the postponement of the convention from May to June and the final election result indicated a well-orchestrated convention dominated by Mwanawasa's supporters. The nomination procedure at the convention was marred by violence instigated by party youth, quite obviously in favour of Mwanawasa. Two contenders for the presidency were barred from competing, although no analyst saw them as having a substantial power base in MMD. Nevers Mumba, formerly leader of the dissolved National Citizen's Coalition and intermittent vice-president of the republic, was accused of graft and expelled from the party. Former Labour Party Leader Nason Msoni was physically harassed at the convention and abandoned his candidacy. The once influential ‘true blue’ faction of the so-called ‘Bemba-camp’ and Chiluba supporters also had no visible relevance. Already in 2004, all but one of the nine MMD provincial conferences had resolved to support Mwanawasa. However, despite his personal success, Mwanawasa did not enjoy a complete walkover, since some of his prominent allies lost their positions. Losers included Vernon Mwaanga, the national secretary, and Boniface Kawimbe, the national chairman. Commentators in the press and representatives of the Foundation for Democratic Process (FODEP), a respected local civic education and election monitoring organisation, qualified the electoral process in the MMD, once the champion of democratisation, as “manipulated” and “undemocratic”.

On 3 August, shortly after his nomination for the next presidential race, Mwanawasa announced a cabinet reshuffle. Eleven ministers were rotated, while two new faces were added to the cabinet. Mwaanga, the recent loser at the party convention, was the most prominent newcomer. Apart from once being the supposed leader of the Chiluba faction, he was seen to be a most useful campaign manager for the upcoming elections. The major intention of the reshuffle, apparently, was to shift key loyalists into positions of influence. The significance of previous cabinet reshuffles in January, March and April was not very clear, though they created uncertainty among the office holders and were also partly necessitated by ‘underperforming’ ministers.

MMD's position vis-à-vis the opposition parties was strengthened when it won three by-elections in Kasempa (Northwestern), Sinjembela (Western) and Kankoyo (Copperbelt province) on 4 March. These results showed that only the United Party for National Development (UPND) continued to be viewed as a strong challenger to MMD. In total, MMD had won 17 of the 18 by-elections since 2001, most of these representing gains from the opposition. Last year's newly formed Party for Unity, Democracy and Development (PUDD), an offspring of MMD, fared badly in the three by-elections, trailing in sixth place even in Kankoyo, where they might have had an impact. Nevertheless, rumours continued of double membership in MMD and PUDD and the true strength of the party remained unknown, since no by-elections took place in those areas of Northern and Luapula provinces where the party is supposed to have a large following and where MMD also has its strongholds.

All other opposition parties continued to be in dire straits. The United Party for National Development (UPND) was paralysed by a leadership vacuum because party president Anderson Mazoka is seriously ill and was frequently in South African hospitals. Several party leaders raised doubts about Mazoka's ability to contest the presidential elections and began to view him as an encumbrance. In the face of public calls for him to step aside as party president, the party, which had never held proper elections for its top leadership, remained divided as to how to deal with the problem. Since 2001, the party's strength in parliament had declined from 49 to 41 MPs. Some of the MPs had been expelled from the party because they had accepted cabinet posts in the MMD government, and UPND candidates had lost all subsequent by-elections bar one. Towards the end of the year, prominent members of the national executive council resigned their positions, among them the national chairman, Henry Mtonga (14 November) and the vice-president, Robert Sichinga (1 December). A pre-election convention was planned only for 2006, by which time it may be too late to decide on new leaders who might be in a position to win the elections. The Forum for Democracy and Development (FDD) was crippled by the massive debt it had incurred during the 2001 election campaign. A planned convention had to be cancelled for lack of funds. On 1 May, the party elected the first-ever female party president in Zambia, Edith Nawakwi, who defeated the general secretary, Ernest Mwansa, by 610 to 208 votes in the second round of a turbulent contest, while party founder Christon Tembo retired from politics. After faltering for more than two years, FDD finally expelled three MPs from the party for joining Mwanawasa's cabinet in 2002 without the approval of the party.

The open rift in the former state party, United National Party of Independence (UNIP), deepened. Both camps, one led by party president Tilyenji Kaunda, son of the former Zambian president and party founder Kenneth Kaunda, the other led by Simon Mwewa, who claimed the presidency for himself, ran parallel administrative structures within the party. The conflict was essentially over the handling of the party's substantial fortunes and over tactics, specifically whether the controversial fame of the Kaunda family would enable the party to win or not. Once again, the party lost an MP, who was serving in Mwanawasa's cabinet, through defection to MMD and two others through deaths, thus requiring three new by-elections that could be won by MMD. As indicated by by-election results, the key question for the 2006 election, frequently raised and already being negotiated by opposition politicians, was whether they could agree on a merger or at least on a single presidential candidate. In the 2001 elections, opposition parties won 70% of the vote and more than 50% of the seats, but MMD won the presidency with less than 30% of the vote and, subsequently, a parliamentary majority, because the opposition was so deeply divided. At least two attempts to unite the opposition parties for the upcoming elections failed during the year and none of the by-elections was jointly contested.

As in 2004, the conflict over a new constitution dragged on throughout the year without much variation. Only the opposition movement comprised of opposition parties, civil society and religious groups under the umbrella Constitution Coalition 2005 managed to mount increasing pressure on government. The first protests were not very well organised, and only some 2,000 people attended the demonstrations mounted on 6 January during working hours. In contrast, on 1 November between 10,000 and 50,000 people marched on parliament to hand over a petition demanding that a constituent assembly bill be introduced. This mass mobilisation of the opposition evoked memories of the success of the anti-third-term movement that had stopped former President Chiluba from changing the constitution in 2001.

Two major issues related to the constitution gave rise to contentious relations between government and opposition. First, the latter wanted constitutional reform before the 2006 elections, while government maintained that a new constitution would only be ready in 2008. Second, the opposition demanded a constituent assembly, so that the new constitution would be properly legitimised. This the government refused, as such an assembly would ultimately necessitate a referendum and the whole process would be too costly. The cost argument used by government was to the effect that current fiscal austerity measures would be in danger if the money had to come from domestic sources; that donors, according to Mwanawasa, were not prepared to assist with additional funds for an assembly and referendum; and that, in consequence, he (Mwanawasa) favoured parliamentary approval of a new constitution.

However, the opposition suspected that the timing and financial arguments were only a disguise for the true reasons for the government's reluctance to adopt a new constitution early. For them, Mwanawasa wanted to go to the ballot under the current constitution, which would allow him to win without an absolute majority, as he had in 2001. In fact, government consistently resisted the strong pressure to include a clause in the constitution that stipulated a 50% plus one majority for the election of the president – a principle that had been abolished by Mwanawasa's predecessor in 1996 to ease his re-election. On 24 February, the cabinet had already rejected wide-ranging electoral reforms proposed by the Electoral Reform Technical Commission (ERTC) appointed by Mwanawasa in 2004. The ERTC proposal included, in addition to the above 50% plus one, a number of improvements that would accelerate and simplify the decision-making process after contentious election results. The final ERTC draft, submitted in August, reiterated these issues but proposed a change from the first-past-the-post system to a Mixed Member Proportional (MMP) system. The 50% plus one clause was also incorporated into the draft constitution submitted by the Constitutional Review Commission (CRC) to the president on 29 June. CRC also recommended that a new constitution be adopted by a constituent assembly. Finally, the MMD majority in the National Assembly in a vote of 66 to 54 defeated a motion by a Patriotic Front MP that was supported by all opposition parties in favour of a constitutional amendment to implement the 50% plus one clause. Government opposed such a clause by arguing that the number of candidates would make it unlikely for one to win in the first round, and a second run-off would be too costly and would create confusion. Interestingly, the ERTC proposal had tried (in vain) to counter the cost argument by suggesting that there be no second run, but that the candidate with the highest number of votes should be required by law to negotiate a coalition government with other parties. On 1 November, the electoral commission began to compile the new voters' roll for the 2006 presidential and parliamentary elections. However, because of the low number of registered voters, the first 21-day registration period had to be extended by another 21 days.

Despite the president's declared fight against corruption, no major improvements had been observed since Mwanawasa had come to power. In November, the parliamentary committee on legal affairs, governance, human rights and gender matters stated that even among the law enforcement agencies, including the drug enforcement commission and the anti-corruption commission, that were supposed to fight corruption, the scourge was “rampant”. The police, however, were singled out as the “most corrupt” among these agencies, allegations which even Home Affairs Minister Bates Namuyambu could not deny. The old conflict between the ‘Post’ newspaper editor-in-chief Fred M'membe and the government was kept alive when the award-winning journalist and founding member of MMD was again arrested (but later released on bond) and charged with defaming the president on 9 November. He was publicly warned several times by officials over his criticising the president and his government. In exposing government corruption and abuses of power during Chiluba's presidency, he and his staff had been repeatedly arrested, hit with more than 50 lawsuits, had issues of the paper banned and confiscated, and had seen the printing press stopped and offices raided by MMD cadres.

Foreign Affairs

President Mwanawasa tried to improve ties with neighbouring countries, concentrating on economic relations. On 8 March, he began a three-day state visit to Botswana to foster trade and economic cooperation. The main focus of his talks with President Mogae was the envisaged Kazungula bridge, which will form the first road link between the two countries and replace a ferry at the main border crossing on the Zambezi River. Mwanawasa described bilateral relations as “excellent”. In order to improve the relationship between neighbouring Angola and Zambia, officials from both countries began discussions in Luanda on 21 March on re-establishing direct air and rail links between the two countries. Upon returning from a state visit to Angola, Mwanawasa announced in Lusaka on 11 November that Zambian and Angolan officials were working towards the reopening of the Benguela railway line between the two countries, which had been abandoned in the 1970s because of Angola's civil war. The Benguela railway offers landlocked Zambia a shorter and cheaper export route to the Atlantic coast. These developments were seen as further evidence of the substantial improvement in bilateral relations since Mwanawasa had come to power, since, according to Angolan diplomats, relations “were not good” before. When the Angolan and Zambian defence ministers met for the 22nd Angolan-Zambian defence and security joint permanent commission in Luanda from 17 to 19 October, they even declared their satisfaction with the security situation along the border and in the fight against cross-border crime. During the state visit to Lusaka (29–31 July) of his Namibian counterpart, President Hifikepunye Pohamba, Mwanawasa discussed trade issues in light of last year's opening of the new Katima Mulilo bridge and Livingstone-Sesheke road, developments that were regarded as ‘epoch-making’ for commercial trade and tourism in the region. Another component of this ‘economic diplomacy’ was the plan to establish a Zambia, Malawi, Mozambique Trade Growth Triangle. This would be a NEPAD project, Commerce, Trade and Industry Minister Dipak Patel disclosed on 16 August. The close ties with South Africa were manifested in a number of meetings between ministers. South African Deputy President Jacob Zuma, together with his foreign minister met with their Zambian counterparts during an official visit to Zambia on 2 and 3 June. On 4 October, the deputy foreign affairs ministers of both countries met to discuss closer cooperation in the economic, security, scientific, tourism, technical and cultural fields. The foreign affairs ministers met again in Tshwane (Pretoria) on 18 October to sign a closer cooperation agreement in these fields.

Economic cooperation and the promotion of industries and tourism were at the core of the discussions at the Japan-Zambia summit meeting in Tokyo on 18 January. At the meeting, Mwanawasa assured Prime Minister Koizumi of Zambia's support for Japan's claim for a permanent seat on the UN Security Council. The government was also eager to strengthen Zambia's ties with the People's Republic of China, as indicated in a series of meetings. On 14 September, Mwanawasa met with his Chinese counterpart Hu Jintao at UN headquarters in New York while attending the 60th General Assembly plenary meetings. Both sides reached important new consensus on strengthening bilateral relations, which have been characterised by continually expanding economic and trade cooperation over the last few years. At the same time, 13 to 15 September, a 16-member Communist Party of China delegation visited Zambia. In November, a delegation from the standing committee on economic affairs of the Chinese People's Political Consultative Conference came to study Zambian policy on agriculture, land and investment in order to accelerate Chinese investment in the country. Finally, on 20 December, Vice-President Lupando Augustine Festus Mwape met his Chinese counterpart in Beijing to sign a number of documents on economic and technological cooperation. They also agreed to make efforts to maintain high-level visits and strengthen consultation in international affairs in a bid to safeguard the common interests of developing countries.

At the same time, Mwanawasa emphasised the cordial relationship with the US. In receiving the credentials of the new US ambassador on 12 December, he noted that he valued the growing partnership with the US as reflected in the growth of bilateral programmes and in new initiatives, including President Bush's emergency plan for AIDS relief, the Millennium Challenge Account programme and other White House initiatives. As a result of these initiatives, overall US assistance had grown from about $ 40 m in 2001 to more than $ 200 m in 2005. He also indicated his willingness to work with the US government in the fight against terrorism, since Zambia shares American concerns about terrorism.

The government also participated actively in UN affairs. Zambia agreed to send a company (180 to 200 soldiers) as peacekeepers to Sudan by the end of June. The Zambian troops were part of the UN mission, established after the Security Council passed a resolution on 24 March to despatch a 10,000-strong peacekeeping force to southern Sudan to monitor the January peace accord. About 20 Zambian observers formed part of the AU mission that was already stationed in Sudan's western Darfur province. Mwanawasa also attended the 11th and 12th meetings of the 60th General Assembly plenary in September. As regards UN reform, Zambia supported the AU demand for two permanent seats on the Security Council with full privileges, including veto rights, but also permanent membership with full privileges for Brazil, Germany, India and Japan. The Commonwealth heads of government meeting on 25 and 26 November in Malta was attended by the president. On 21 December, he, together with Foreign Affairs Minister Ronnie Shikapwasha and 13 other heads of state, attended the inauguration ceremony in Dar es Salaam of Jakaya Kikwete, the newly elected president of Tanzania.

Of the 34,500 Angolan refugees who were expected to be repatriated as part of a voluntary programme run by the UNHCR jointly with the Angolan and Zambian governments, only half had returned home by the end of the year. At least 17,500 officially registered Angolan refugees, most likely much more, remained in the country. In addition, Zambia still hosts an estimated 55,000 Congolese refugees. Most of these had fled at the height of the civil strife in the DR Congo in 2000 and they showed little willingness to return to their country.

Socioeconomic Developments

Financial and economic policy was a continuation of the government's efforts in the previous year to further improve macroeconomic stability and investments for growth in order to reach the completion point under the HIPC initiative. This task was accomplished by the end of the year, when Zambia was granted 100% debt relief by the IMF. However, the IMF expected the government to further improve efficiency and transparency under the Public Expenditure Management and Fiscal Accountability (PEMFA) initiative sponsored by a number of donors and launched in June.

The annual budget presented on 28 January by Finance Minister Ng'andu Magande aimed at preserving recent economic gains and limiting government borrowing to levels below those of the previous year. This meant the continuation of the austerity policy that was required by the IMF in order to achieve debt forgiveness. Most of the economic and financial targets set out in the budget were achieved: Real GDP grew by 5.1%, which was less than the revised growth rate of 5.4% for 2004 and below the 6% target. The rate of inflation of 15.9% remained close to the monetary policy objective of 15%, and was the lowest inflation rate in the past ten years, despite unfavourable circumstances. The international oil market was characterised by sustained price increases and, in addition, the country experienced a disruption to its fuel supply owing to a shutdown of the Indeni oil refinery (October to September). A partial drought in the country caused food prices to rise as well. Domestic borrowing – which is equal to the budget deficit – was reduced to 1.9%, but failed to reach the budget target of 1.6% by a small margin.

The Civil Society for Poverty Reduction (CSPR), a network of civil society organisations, criticised the 2005 budget as inadequate for achieving the necessary improvements in the quality of life of many Zambians, of whom 68% still live below the poverty line. The nominal 17.4% increment in government spending will be eaten up by inflation. CSPR pointed out that the respective 3.5% and 0.46% nominal increases in education and health spending, the two sectors viewed as most critical to the fight against poverty, are “purely cosmetic” – in fact, given the inflation rate, reduced spending in both sectors was implied. Civil society organisations observed that by the end of the year there had been no significant poverty reduction in 2005, as a consequence of which life expectancy had declined to 37.5 years.

The overall economic growth arose from expansion in various sectors. The annual growth of the dominant mining sector slowed from 13.3% to only 2.8%. Nevertheless, more than 1,300 new jobs were created at Kansanshi mine alone. Manufacturing grew by 3.7%, driven by agriculture-related sub-sectors. The growth of the agriculture sector, at only 2.8%, had slowed as a result of a partial drought and the outbreak of livestock disease in Southern and Central provinces. Production of key staples such as maize declined by 28.6%, but output of non-food crops (cotton, tobacco) increased. Major improvements were achieved in tourism and construction: the former posting an increased growth rate of 12.1%, while the latter remained strong at 19.9%.

External economic relations improved but were still problematic overall. The trade balance showed a surplus of $ 59 m, with export earnings increasing by 17.5% to $ 2,127 m and doubling compared to 2003 (imports were $ 2,068 m). The rise in export earnings was mainly due to the growth in volume and price of copper, the latter rising by 33% from $ 1.21 to $ 1.61 per pound. Also noteworthy was the fact that Zambian non-traditional exports (tobacco, cotton, sugar, maize seed, copper wire, electrical cables) rose by about 20%, reflecting increased diversification in exports – non-traditional exports have more than doubled over the last five years. However, the current account deficit increased to 11.5% of GDP, or an estimated $ 826 m, while it had been at only 10.7% of GDP in 2004. The kwacha appreciated against the $, with an average rate of K 4.50 to the dollar: in 2004 the exchange rate was K 4.80.

Privatisation and parastatal commercialisation continued to make progress, albeit slow. Monarch Zambia, Zambia Seed Company and the almost defunct Kafue Textiles of Zambia were privatised during the year, bringing the total number of privatisations to 262 out of the 284 companies listed for privatisation. The commercialisation of the Zambia Electricity Supply Company (ZESCO) was finally completed, and the government decided to commercialise Zambia Telecommunications Company (ZAMTEL). Negotiations with two bidders for the 49% share in the Zambia National Commercial Bank (ZNCB) were terminated by the Zambia Privatisation Agency (ZPA) in March, while the performance of the bank had improved with the making of a profit in 2004. In April, the sale of ZNCB shares was re-advertised by ZPA. When ZPA reached agreement with a subsidiary of Rabobank of the Netherlands on the sale, a Zambian consortium led by an MP, which had been disqualified by ZPA, stopped the deal through a high court order.

For three weeks during September and October, the economy and public life were severely hit by the worst fuel shortage in 20 years. Caused by mismanagement of the only oil refinery by Indeni and the ministry of energy and water development, it not only hampered commercial traffic and slowed production, particularly in the mining sector, by about 50%, but also massively increased fuel imports. Government again misjudged the looming food crisis. Since the first quarter, it had been obvious that because of drought during the 2004–05 season the maize harvest would be reduced from 1.3 m to 866,000 tonnes. Until September, government denied the need for maize imports. Then, in a complete u-turn, it decided that at least 235,000 tonnes of imports were necessary and asked donors to provide funds for additional food aid for about 1.7 m needy Zambians.

On 22 December, the IMF announced as part of the Multilateral Debt Relief Initiative 100% debt relief on all debt owing to the IMF before 2005, amounting to about $ 577 m. Already in April, the IMF country report had noted that Zambia had “satisfactorily fulfilled the requirements for reaching the completion point” under the HIPC initiative, meaning satisfactory recent macroeconomic performance, progress in poverty reduction and improvements in public expenditure management. The country had met all but three of the completion point conditions, namely restructuring and privatisation of ZESCO and ZNCB, and the review of the Integrated Financial Management and Information System. Debt relief applied first to the IMF debt, while the details of further bilateral and multilateral debt cancellations were to be negotiated in 2006. Anticipating the IMF decision, Japan had already cancelled all Zambian debts (amounting to $ 692 m) in January; and the UK wrote off Zambia's entire debt of $ 230 m in February. All told, it is expected that the debt relief plan will reduce Zambia's total debt from about $ 7.1 bn to $ 502 m.