Walking a tightrope: Sata struggles for balanceBy MICHAEL CHAWE in Lusaka | Tuesday, March 13  2012 at  15:04

At almost six months in power, Zambia President Michael Sata is grappling with the huge challenge of delivering on his near-extravagant economic promises made mainly to the young and unemployed electorate who propelled him to high office in September.

Many, such as a review of the vital relationship with China, will have to be done without rattling foreign investors in Africa's biggest copper producer.

Shortly after his inauguration, Mr Sata, 74, popularly known as King Cobra for his sharp tongue against perceived poor labour conditions in foreign mining firms, and a former critic of Chinese investment, said he planned to start some then undetailed economic programmes within 90 days.

Foreign investors have been battling anxiety over a lack clarity about Mr Sata’s expected policy direction and what he stands for, beyond the campaign talk that swayed hundreds of thousands of young urban Zambians to vote enthusiastically for him.

The removal of a party that had been in power heightened fears of radical policy shift. The ousted MMD was an extreme capitalist party while Mr Sata's talk had been largely socialist, fuelling concern of government control of key economic sectors.

Global ratings firm Fitch recently revised Zambia's economic outlook to negative, citing among other reasons Mr Sata’s recent reversal of a privatisation deal involving the state-run company Zamtel which had been in 2010 controversially sold to Libyan government investment vehicle LAP Green networks for $257 million.

Undermine rights

Fitch said this, and the "possible" reversal of the Zanaco Bank 5.7 million-euro sale to Rabobank of the Netherlands could undermine property rights, while planned reforms of mining and banking could negatively affect investment and consequently macro-economic stability.

Former mines minister Wylbur Simuusa last month said the new Patriotic Front government might reinstate a 25 per cent windfall tax if copper prices hit more than $10,000 a tonne.

The central bank has in the meantime increased its minimum capital requirement for foreign commercial banks to $100 million, and $20 million for locally-owned banks.

Mr Sata’s reign has already seen many political changes. He has replaced most constitutional office holders appointed by his predecessor Rupiah Banda, with the expected removal of the judiciary head the latest in a rolling line of culls.

The smooth transition of power last year burnished Zambia's democratic credentials, especially in a regional background that had seen deadly electoral fallouts in Kenya, Cote d'Ivoire and Zimbabwe.

However, Mr Sata is unexpectedly demonstrating political savvy in dealing with Chinese companies, which have so far sunk over $2 billion into Zambia's key economic sectors, dominated by mining.

Perhaps cognisant of this, he has toned down his anti-Chinese rhetoric, helping shore up investor sentiment and instead opted for a soft-power approach.

Soft-power approach

Recently, Labour minister Chishimba Kambwili was shunted to the lower-profile sports ministry after a particularly ill-advised public run in with the Chinese envoy to Zambia Zhou Yuxiao.

"Statements on the economy made by ministers that are not the competent channels for the issues they raise are damaging to our credibility as a country. As my very final warning, I ask all the ministers not to lead me into temptation," said Mr Sata while making the reshuffle.

Mr Sata, while clear that labour rights must be respected, has underlined that he expects a "mutual relationship" with the Chinese.

The region is also wondering how Mr Sata will fit into the larger Southern Africa Development Cooperation puzzle.

"President Sata has made a lot of promises to Zambians so he will have an internal or inward looking policy and as such the implications to the region won't be much," Mr Robert Bwalya, a political analyst and economics student at the University of Namibia, said.

"His government won't play a leading role in the region in resolving regional problems...Zambia’s conduct has been non-interference."

Mr Sata, after a mild tantrum, reconciled with Malawi President Bingu wa Mutharika who had thrown him out of his country when he was the opposition leader.

Await tangibles

Meanwhile Zambian voters await the promised raft of domestic policy changes as his ideology is translated into tangibles.

"We don’t see much policy shift in the Sata administration, but people still expect him to come out harder on fighting corruption," said Mr Bwalya.

So far, most of the changes have been cosmetic, such as the renaming of the country's airports and the controversial creation and realignment of administrative units.

A promise to write a new constitution is yet to yield a draft, turning the issue into canon fodder for the critics.

However his swift dismissal of a key aid linked to bribery in January won him praise.

"This... demonstrates in practice his political will in fighting corruption and acting against even his closest senior staff. This is a very rare phenomenon as others would have opted to shield such alleged wrong doing," Mr Goodwell Lungu, the executive director of the Zambian chapter of Transparency International told journalists on January 29.

Mr Sata reiterates that he is “allergic” to corruption.

But it is his handling of the economy that is being keenly scrutinised.

His recent departure from his populist position of raising taxes on mining companies to a new one that favours a broader tax base inclusive of foreign investors has suggested that he is alive to the risks of ad hoc economic decisions.

In keeping with

His administration is unlikely to depart from the MMD's pragmatic economic policy agenda that was market-oriented and saw robust foreign direct investment and growth rates approaching seven per cent.

Attracting FDI would be an option for creating the five million jobs promised to the youth while he was on the campaign trail.

A programme of heavily subsiding smallholder farmers that has seen Zambia become a net food exporter is also likely to continue, although high production costs threaten to put the brakes on the gains.

His Patriotic Front party will also be courting the rural vote that has not been its bedrock since formation.

It appears he has time on his side as Zambians bask in a feel-good national psyche that was further polished by the national football team's emotional win of the African Cup of Nations.

"I think from the ground he still has the support of the people, including the media. People are still looking at him positively," Brian Chanda, a freelance journalist said.

"But there some people who are disappointed with him especially with some public appointments he has made. Others, including some of his supporters, are gradually distancing themselves from him because of mistakes which are politically fundamental,"

But further delays in delivering on some early promises may dent his famed "Man of Action" tag.