Index trend
Previous Quarterly Editions
Expropriation Risk: 55 54 54 48 ▼Political Violence Risk:39 37 37 37 ►Terrorism Risk:12 12 12 12 ►Exchange Transfer and Trade Sanction Risk: 63 64 64 64 ►Sovereign Default Risk:83 83 83 83 ►
Overall Risk Temperature: 58 (Significant -2) TREND ▼
Special topic: Political polarization
Zambia has historically been known as a country that features relatively low levels of polarization. Although ethnicity and broader linguistic identities play an important role in political mobilization, the country has never seen ethnic conflict and violence of a national scale. Similarly, while political elites have often competed intensively for power, they have often been able to come to agreements to manage their disagreements peacefully when it matters most. Clashes between rival gangs are not uncommon but tend to be low level, to occur around elections and to not extend beyond individuals specifically recruited to play this role.
This was well demonstrated by the 2021 general elections, when Zambian citizens came together in large numbers to go to the ballot box and vote for change, rejecting the increasingly corrupt and authoritarian government of President Edgar Lungu. The extent of support for a transfer of power meant that the main opposition leader, Hakainde Hichilema, won strong support from most parts of the country, receiving millions of votes from outside of his own ethnic support base among the Tonga in Southern Province. Moreover, while Lungu immediately rejected the results and refused to concede defeat to Hichilema, reflecting past bad blood between the two leaders that had seen Hichilema arrested and detained on trumped up charges of treason in 2017, he was ultimately persuaded to stand down for the good of the country. Instead of a prolonged political crisis, the election therefore ended with media coverage of the two leaders smiling and joking together at State House.
Elite polarization has been on the rise, however, due to the poor relationship between Lungu and Hichilema, and the way that the government has managed opposition parties since winning power. Most notably, anti-corruption proceedings against former government figures and their families, a refusal to allow Lungu to leave the country for medical treatment and the blatant disruption of opposition activities — such as the denial of permits to hold rallies — has led to accusations of repression and political marginalization.
For their part, opposition leaders have actively sought to antagonize the president and undermine his reputation, for example, by spreading disinformation about him, and, in the worst example, participating in a hostile and factually incorrect campaign against the Zambian government led by figures in the Zimbabwean ruling party, who were angry that a Southern African Development Community election observation mission headed by Zambian leader Nevers Mumba issued an extremely critical statement about the quality of the 2023 Zimbabwean elections. As a result, Irene Khan, the Special Rapporteur on Freedom of Expression, recently concluded a visit to Zambia by saying, “I am disturbed by the rising tide of disinformation and smear campaigns generated by politicians, including from the opposition, seeking to manipulate public opinion, heighten tensions and create confusion.”
Despite the rising elite tensions, affective polarization remains relatively low. While Zambians are less trustful of people of other ethnic groups and who support other parties, for example, the effect of this is modest, and the country’s reputation for peace and tolerance continues to be well earned.
By contrast, while ideological polarization has remained fairly low compared with other regions, it has been fairly high by African standards. One reason for this is that the development of Zambian politics was heavily shaped by the trade union movement, which advocated for more left-wing policies and at times strongly pushed back against the economic liberalism advocated by the International Monetary Fund and the World Bank.
This form of politics has weakened over time, but elements of it still shape political competition today. Hichilema’s government, for example, is generally seen to be less statist and more pro-business, while Lungu’s Patriotic Front is more populist and implemented policies such as a national minimum wage while in power. While these differences do not drive political conflict, it is feasible that they could fuel mass protests against specific economic policies, for example, reductions in subsidies and government expenditure necessitated by the recent economic rescue package agreed with the International Monetary Fund.
TREND ▼
Given his demonstrated commitment to repaying the country’s debt and honoring contracts, it is highly unlikely that Hichilema’s government will pose an expropriation risk.
The government will come under increasing pressure the closer it comes to the 2026 elections, however, especially if there are no signs of economic recovery. Economic growth projections for 2024 were reduced from 2.3% to just 1.2% by the International Monetary Fund, in part due to the negative impact of a regional drought, although it is expected to rebound to over 5% in 2025.
This is insufficient to create the jobs that Zambian citizens are hoping for. In turn, this will increase the pressure on Hichilema to drive a harder bargain with foreign mining companies.
The government’s position on mining investment has so far been clouded by contradictory signals. On the one hand, relations with companies such as Vedanta has improved since Lungu left office. For example, Vedanta’s five-year legal dispute with the government over the ownership of Konkola Copper Mines (KCM) has been resolved in a deal that will see the Vedanta contribute $2,464 million to meet some of KCM's obligations while fundraising $1 billion over five years to support further investment.
On the other hand, a proposed legislative change contained in the Minerals Regulation Commission Bill would enable the state to take up an interest in exploration licenses before they are granted to a private party and to have greater oversight over the operations of mining companies. This has unsettled foreign investors and has been heavily criticized by industry bodies such as the Association of Zambian Mineral Exploration Companies and the Zambia Chamber of Mines.
TREND ►
Zambia has historically had low levels of political violence, and the military has never been used to settle political disputes. The rise in tensions between Hichilema and Lungu, and between the government and the opposition more generally, has generated greater concern about the risk of political violence in the future, however. In a context of prolonged economic hardship, and widespread frustration about cuts in government subsidies and expenditure introduced as part of the deal with the International Monetary Fund, there is a greater risk that political controversies spill over into mass demonstrations and urban unrest.
There is also a disconnect between the main political parties and ordinary citizens. The latest Afrobarometer survey found that 58% of citizens do not feel close to any political party. This suggests that current economic challenges may result in political apathy rather than political conflict, but this will depend on the ability of the government to ensure that the cost of living does not increase to a point where citizens become desperate. In the same Afrobarometer poll, 60% of respondents said that the government was handling the economy badly.
There are no terrorist organizations known to be operating in Zambia. The country has not experienced a major terrorist incident. However, any serious deterioration in the country’s stability would reduce the ability of the security services to monitor external threats.
Persistently high inflation and interest rates alongside a still-weak kwacha mean the authorities could again resort to ad hoc foreign-exchange controls to protect reserves.
Inflation is among the main challenges facing Hichilema’s government. The annual inflation rate increased to 16.8% in February 2025, from 16.7% in January. Significantly, the figures are higher for food price inflation — the measure felt most keenly by ordinary Zambians — which hit 20.6% in February, up from 19.2% in January. Interest rates have been progressively increased to try to bring inflation down, with limited effect. From 13.5% in May 2025, rates were increased to 14.5% in February 2025, raising concerns that this might constrain the country’s attempt to get economic growth back on track.
The price of copper — critical to the Zambian economy — has rebounded somewhat, a rare piece of good news for Hichilema. From $4.17 per pound in September 2024, copper rose to $4.88 in March, having hit a recent high of $4.93 earlier the same month. Along with the spending cuts introduced as part of the agreement with the International Monetary Fund, this will make it significantly easier for Hichilema’s government to maintain a balanced budget.
The agreement Zambia struck with its international bondholders in 2024 removed around $900 million of debt and spread future payments over a much longer timeline. This has made debt repayments more manageable, but the central challenge facing the government remains: It does not generate sufficient income to meet its spending goals. In line with this, the budget deficit for 2024 is now expected to be over 6%, above the target of 4.8%, and it is expected to remain above 5% in order to cushion citizens from the impact of drought and an economic downturn.