Short honeymoon likely for Zambia's Sata

Reuters , Saturday 24 Sep 2011

Analysts warn that Zambia's new President Michael Sata has a tough balancing act: he must 'water down' economic promises to the unemployed to not cause alarm to foreign investors

Zambia's new leader Michael Sata will struggle to deliver quickly on his economic promises to the young and unemployed voters who propelled him to power without upsetting foreign investors in Africa's biggest copper producer, analysts said on Saturday.

Shortly after his inauguration on Friday, Sata, a past critic of Chinese investment, said he planned to start some economic programmes within 90 days although that would mean tinkering with the current budget, which runs until December.

"The president has to be very realistic and water down the expectations," said Chivamba Kanyama of the Economics Association of Zambians.

Any drastic fiscal changes could rattle foreign investors, whose anxiety after this week's election upset is compounded by a lack of knowledge about what Sata stands for beyond the campaign rhetoric that swayed thousands of young, urban Zambians to vote for him.

The kwacha currency fell 2.9 per cent to a 14-month-low of 5,150 against the dollar after Sata's victory and traders said it would remain vulnerable until he gave clearer indications on his future policies.

Investors are also keeping an eye on the composition of Sata's economic team, which is expected to be in place in the next few weeks.

"In my opinion it will be much more realistic if the government sets its 90-day goal on 1 January, when the new budget cycle starts. There is no choice but to follow the current budget," Kanyama said.

But delays could immediately undermine the 74-year-old's image as a man of action after energetic terms as governor of Lusaka in the 1980s and a cabinet minister in the 1990s.

Sata has toned down his rhetoric against foreign mining firms, especially from China, in recent years but made clear on Friday that he wanted labour laws observed.

Many miners complain of ill-treatment at the hands of Chinese bosses. In one case in the northern Copper Belt in 2005, some miners were shot and wounded after complaining about their pay.

Most mining companies appear to be taking the political change in their stride.

"We believe that Zambia will continue to be a leading destination for investment and Barrick is excited to be a partner in the country's development," Barrick Gold, a major investor, said in a statement.

The mood on the streets, where many people feel they have missed out on the fruits of 15 years of economic liberalisation, may not be so diplomatic.

"We have celebrated this change but we now need our government to deliver on its promises to show that it is different," said Justin Mukwita, a mobile phone airtime vendor on the streets of the capital.

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