Zambia’s Hichilema win gives investors continuity

Zambia's President Hakainde Hichilema secured a second term in a landslide victory, providing investors with the policy continuity they desired, according to Stuart Culverhouse, chief economist and head of fixed-income research at Tellimer. The election results, released early Tuesday morning, indicated that Hichilema received approximately 60% of valid votes, compared to 38% for his main challenger Brian Mundubile.

Hichilema's first term was marked by a significant debt restructuring and IMF-backed reforms, amid challenges such as drought, power shortages, and a weak currency. The challenge now, according to Culverhouse, will be to build upon the gains in macroeconomic stability, reduce inflation, and maintain fiscal discipline while accelerating growth and investment. If re-elected, Hichilema's government has already indicated its intention to seek a new IMF program, which may serve as the first test for investors.

Zambia aims to secure a new IMF program by the end of the year, following the expiration of its previous $1.7 billion arrangement in January. Finance Minister Situmbeko Musokotwane emphasized the need for fresh investment to drive growth and create jobs, but stated that it was still too early for the country to return to international bond markets. Investors, however, believe that an eventual Eurobond issuance could help attract foreign capital and provide companies in the country with a benchmark for pricing debt.

Philip Fielding, portfolio manager at Fidelity International, suggested that such a debt reissue would contribute to building a broader range of bond maturities, offering investors more options. Currently, Zambia's 2033 dollar bond, the country's sole international bond, was traded at 97.72 cents on the dollar on Tuesday, showing a relatively stable performance despite a weaker backdrop for African debt markets.