Tuesday, August 4, 2009

Does Zambia's Electoral System Need Reform?

(Published in Zambian Economist, June, 2009, Volume 1 Lusaka, Zambia)

1. Introduction

Zambia faces many challenges in attempting to improve its electoral system so that the system becomes and is seen to be fair and efficient.

These challenges include improving voter registration (by revising the voters roll, computerizing the system and adopting a system that does not need using an NRC); Improving electoral participation ( motivating individual voters, doing away with institutional bottlenecks such as creating possibility to cast a vote in any constituency/ district/ province other than where you registered, allowing advance voting and voting by mail etc; provision of sate subsides to political parties and son on).

The purpose of this article is not to discuss these challenges but to contribute on the currently raging debate on the need for Zambia to have a Parliament that is representative of the votes cast and a President who is elected by the majority of voters to ensure that there is legitimacy be in leadership.

2. Parliamentary Elections

In the Zambian Electoral system, the country is divided into 150 single-member constituencies. Representatives are elected to Parliament by the first-part- the post (FPTP) (single majority) method which awards seats inn the National Assembly to the candidates with largest number of votes in each constituency. Under this system, the strongest party in the National Assembly may have an absolute majority of seats with less than an absolute majority of votes cast. This has been true in Zambia since 2001 where the combined votes of opposition parties were more than those of the ruling MMD. However, considered on its own, the MMD in all the past three general elections had both absolute majorities in terms of votes cast as well as seats awarded when compared to other individual parties. In the 2008 general elections for instance, using presidential votes cast, a total of 1,791,806 votes were cast and the MMD candidate Rupiah Banda obtained 718,359 ( 40.90%) votes, PF candidate Michael Sata had 683,150 (38.13%) votes, UPND candidate Hakainde Hichilema had 353,018 (19.70%) votes and the Heritage Party candidate Godfrey Miyanda had 13,683(0.76%) votes.

Generally, the current Electoral system favors parties whose support is concentrated ethnically (geographically) and tends to discriminate against parties with support spread across the constituencies. In the 2008 Elections for instance, support for MMD was greatest in all rural areas other than in Southern, Luapula and half of Northern Province. The PF support was on the copper belt, Lusaka Urban, Kabwe Urban, Luapula and half of Northern Province. The UPND: support was in Southern Province and two constituencies in North Western Province. The Heritage party was neither here nor there as they were largely considered as spoilers.

3. Proportional Representative
On account of the tendency towards sectarianism and other difficulties of First Past The Post in Parliamentary Elections, many people including the Mungo’mba Constitutional Review Commission recommended the adoption of the Proportional Representation system which in various forms is used in most Western Countries in electing their National Legislatures.

An example of how the Proportional Representative system works may suffice to explain this voting approach. Presently, Zambia constitutes 150 constituencies for which 150 members to Parliament are elected. In the 2006 presidential elections, there were seven (7) parties that contested. The total presidential votes cast which were closely related to parliamentary votes cast were 2,740, 178. If this figure was divided by 150 seats, a seat in Parliament would be awarded to a party with 18,268 votes. In this case, the MMD should have been given 64 seats instead of 43. UPND should have been given 38 seats instead of 26. The HP should have been given 2 seats and APC 1 (one) seat. Similarly in the 2008 elections using presidential elections result, the total votes cast were 1,791,806 which could have meant 11,945 votes per constituencies. In this case, MMD should have been awarded 60 seats instead of 74, the PF 57 instead of 39, the UPND 30 instead of 21 and the Heritage Party at least one seat.

4. Advantages of Proportional Representation
The country has been advised to adopt a form of Proportional Representation electoral method for the following reasons.

1. Political parties will gain representation in Parliament in proportion to their share of votes cast. In real terms, there will be one entity Zambia. Voters will cast votes for parties who in turn will allocate from their lists designated representative per constituency won. On account of this , costly bye-elections will also be done with as parties will simply replace candidates from their lists whenever a vacancy occurred.
2. More parties are likely to gain representation as this electoral method will stimulate voters to take part in elections which will lead to higher voter turnouts. In the 2006 presidential elections, the Heritage Party should have been awarded at least 2 seats and that of APC at least one seat. For argument sake, this could have enabled Gen. Godfrey Miyanda and Mr. Winwright Ngndo to be Members of Parliament and usefully participates in our country’s governance rather than be relegated to history.

3. Bye-elections shall be avoided in both Parliamentary and Presidential elections since there will be only one elect ion and the President will have a running mate in his/her party.

4. The Proportional Representational system will strengthen political parties as organizations and enhance their role in the Zambia political process
5. Presidential Elections (50 + 1)

It was only in the 1995 Constitutional Amendment which in spite of being challenged by many Zambians, President Frederick Chiluba’s administration forced the amendment that provided for the election of the Republican President by a simple majority rather than the absolute majority that was previously provided in the Constitution since 1964. Because of this change, all subsequent victories by Presidential candidates have been on a basis of minority votes. It appears Zambia’s public opinion is strongly of the view to change this and adopt the marjoritarian approach

In 2001, President Levy Mwanawasa won the Presidential elections with a mere 28.69% of the total votes Cast. In the 2006 elections, President Mwanawasa again won by 42.98% of the votes cast. In the elections of 2008 following the demise of President Mwanawasa, Vice President Rupiah Banda won by 40.09% of the votes cast. Because this electoral process creates a President voted by less than the majority who cast votes, many countries have adopted systems where the last two of the candidates re-contest in a re-run of the elections to determine the real winner. Many Zambians are advocating a return to this electoral process of the 50 + 1 method.

The return to marjoritarian doctrines of electing a President is opposed by a section of our society who has advanced cost considerations and the danger of destabilizing the country on sectarian/tribal lines. It is also possible that these opposers are afraid of allowing the opposition to gang up in the re-run to win a majority vote. If such a thing happened, it is possible to have a President from one party who may have no majority members in parliament. This may lead to the formation of a minority government where the government may fail to pass critical legislation which may be opposed by the largest party in the house. This may lead into a costly constitutional crisis that may require parliament to be dissolved and for another costly general election to be held.

6. Recommendations
It is recommended that, as the National Constitutional Conference completes its work on our new constitution, they must be alive to the public demand for the 50 + 1 marjoritaanism doctrine as well as the merits of Proportional Representation. Adoption of proportional representation is the most democratic method of electioneering and is recommended to be adopted in respect of parliamentary elections. With respect to Presidential elections, whereas, it would be cost effective to emulate the South African method where a President is first elected by his/her party and confirmed by parliament, the public opinion in Zambia seems to be the demand to elect a President and his/her running mate by the whole country as is the case in the United States of America on the basis of 50 + 1 marjoritaanism. Both approaches have been tested and provide enormous challenges for Zambia.

Capital Flows and Zambia's Domestic Economy


By Dr Mabita Chitala

The question to be answered is weather there is need for Zambia to regulate its International Trade and regulate the movements of foreign exchange (forex) with the aim of reducing its exposure to financial speculators and the growing global financial turmoil. Should Zambia continue linking up to international financial markets or should it selectively de-link? What strategic choices are open to Zambia.


David Punabantu writing in the Zambia Economist Magazine of June, 2009 Vol. 1 pp5-7 wondered why the Bank of Zambia has continued unlawfully the policy of 100% forex retention by mining companies other than Mopani and other exporters which measure has tended to be discriminatory, stiffed the spirit of competition and allowed the continued plunder of Zambia’s resources. Punabantu lamented that this Policy which was initially introduced as short term measure by the late Minister of Finance Emmanuel Kasonde in the early 1990’s has now become a permanent policy of Government with all its draw backs such as abating capital flight, making commodities in Zambia unnecessarily expensive and negatively affecting the level of domestic investment in Zambia. Punabantu correctly argued for a change of this disastrous policy to one which is common in all other countries where ownership of forex is only possible through local currency (Kwacha) purchase for Goods and Services originating from a country such as Zambia. In other words, forex must first come to Zambia and be changed into Kwacha as used to happen when Zambia experienced the highest growth rates before 1990s. Exporters could then use their Kwacha to purchase Copper and other Exports from Zambia in the same way a Euro wishing to buy any product from the United States must first be converted into United States Dollar and vice versa if it is in Europe. Punabantu correctly concludes that Zambia’s 100% forex retention policy is not only against national development, but not market driven and tends to abate the pillage of Zambia’s Resources. Zambian policy makers are advised to take a leaf and learn from the experiences of countries such as Chile which abandoned this policy and required all exporters to bank their forex earnings in a local bank for a period not less than three months. In fact, Zambia appears to be the only country in the world with such a policy.


The present government policy buttered by IMF conditionalities has been to compel Zambia to make its currency freely convertible for all Current as well Capital Account transactions. Capital Account convertibility (CAC) of the Balance of Payments (BOP) or the freedom to convert Kwacha to forex assets and vice versa at market determined exchange rate or as the IMF has defined it, “the freedom from exchange controls on capital transactions on balance of payments”, continues to be a subject of controversy amount policy makers.

As it is well, the Current Account of the BOP (statement of transitions between Zambia and the world) comprises of visible trade {Exports and Exports},invisible trade {Exchange of Services} and unrequited transfers such as gifts. The Capital Account on the other hands refers to the exchange of capital in form of Loans, Portfolio Investment FDI and changes is official reserves. Transactions in the Capital Account can therefore impact on the composition of national capital of a country, that is, make a country lose control of its economy to foreigners and adversely affect its national sovereignty.

Zambia’s Policy has been to follow the no-liberal view which considers as bad policy state controls that restrict transactions on both the current and Capital Accounts. Therefore normal Current Account Controls such as restriction on imports such as providing quotas and tariffs or requirements to deposit export proceeds in Zambian Banks; and Capital Account measures such as restrictions on various harmful kinds of capital flows by licensing outflows or restricting use of forex including use of multiple exchange rates - all these are considered by neo liberal practitioners as undesirable as they allegedly distort markets and result in allocative inefficiencies, waste, black markets and are costly to maintain.

Neo liberals see many advantages in free flows of capital such that a Country like Zambia would have the chance and potential to access global savings in a variety of non- debt-creating forms, possibility of Zambians holding international diversified portfolio and the country being able to access greater liquidity sources and deeper markets. This thinking is anchored on the Efficient Market Hypothesis {EMH}which holds that “capital markets generate asset prices that, given available information, are best estimates of the present value of future income streams from capital assets.”

The above thinking when measured with the reality on the ground is of course flawed. Financial markets do not behave in the perfect manner but are grossly influenced by speculative behaviors.

The neo-liberals however still maintain that Zambia’s Financial System is still weak characterized by all vices such as insider trading, corruption and weak Corporate Governance and has not sufficiently liberalized financially. The standard recommendation of the IMF has been to compel Zambia to reduce its Capital Account deficit by borrowing. (Current Account Deficit = Capital Account Surplus + Drawing down on reserves). Within the confines of the so called Letter of Intent signed with the IMF are conditions such as compelling Zambia to keep interest rates high in order to allegedly attract capital inflows and improve investor confidence. Other policy measures Zambia has been forced to implement include fiscal prudence and consolidation, bringing inflation to single digit levels, maintain sustainable current account deficits and reserves, complete trade liberalization, strengthen prudential regulation and supervision and liberalization of the Capital Account.

The above prescription by the IMF and their neo-liberal friends in Zambia are wrong. The truth is that the Globalization of Finance Capital and the spread of footloose capital via FDI, Portfolio management, Debt contracting and so on, is a culmination of the process of unequal Capitalist Development in the world. Current Globalization has been shifting control of national markets of multinational corporations and financial intermediaries. Zambia’s domestic market is restrained. Interest rates are kept high to discourage Zambia’s domestic private investment. There is need for Zambia to adopt policies that promote full employment and growth. There is need to selectively de-link from Global Capital that threaten the achievement of the above. Evidence every where shows that free capital mobility has not been associated with high rates of growth. Neither trade openness nor outward orientation been associated with higher growth rates or reduced vulnerability.


The current Global Financial Crisis offers further debate about Zambia’s Economic and Financial Policies, the effects of Financial liberalization and the power of International Finance. The key features of the Global Finance architecture comprise of several features. First, the dominance of Investment Banks, mutual funds, pension funds and hedge funds; Second, securitization or transfer of capital via the sale of stocks and bonds; Thirdly the expansion of new instruments such as arbitrage (taking advantage of forex or interest rate differentials to turn a profit) and derivative trading (buying and selling all the risk without trading the asset itself). Such is the case in instruments such as futures, forward contracts, swaps and options; and hard to monitor transactions made over the counter by telephone or computer and not via exchanges and are mostly off balance sheet transactions, namely, not reflected in assets and liability statements.

The growth of this form of global finance capital has seen the dominance of finance over industry and the system of leveraged buyouts which further confirms that volatility will continue to be central to the world capitalist system.

In terms of economic Governance Policy, Zambia was forced by the Breton Woods institutions and the Paris Club to adopt structural adjustment policies (SAPS) which made Zambia more open to Capital inflows. Tight fiscal and monetary policies including lifting exchange controls and liberalizing the Capital Account were imposed on Zambia. The arguments for unfettered Capital flows or complete capital account liberalization through Portfolio Investment{PI}and FDI as championed by neo-liberals is meant to enable Zambia acquire Capital and Technology. Further, it is assumed that because the resources will be allocated by markets, there will be both enhanced efficiency and Policy discipline. The experience of Zambia is that under its floating exchange rate regime, sudden inflows of capital tends to put pressure on the Kwacha to appreciate and under mine its balance of payments position by causing imports to rise and exports to fall. The conditionalities that are attached to these Capital inflows also tend to exhibit undue influence over domestic policy making where policy space is reduced. Furthermore, the Capital outflows or flight that inscrutably result, has tended to put pressure on Zambia as the Kwacha always depreciates, the country faces debt service difficulties, stock values reduce. the Current Account deficit increase, and generally Zambia’s macro economic vulnerability and Financial instability is aggravated. In other words, such policy regime of unfettered financial liberalization has tended to increase poverty and inequality amount Zambians. As is well recognized, opening up to global port folio flows can result in stagnation of an economy.


The history of economic evolution of all developed countries shows that complete Capital Account convertibility and freedom of capital movements is that the last stage of opening up the economy. Until this stage is reached, various forms of capital control are necessary and inevitable until a certain level of development is reached. It has been extremely unclever for Zambia to completely liberalize before reaching that level necessary for this. Even today, Capital Controls (measures that manage the volume, composition, or allocation of capital flows and/or maintenance of restrictions on investor entrance or exit possibilities) are necessary. All industrialized countries utilized Capital Controls until they reached developed levels in the 1970s. Currently, China and India - the most successful emerging economies use extensive capital controls. Other Counties include Brazil in 1960’s, Chile and Colombia in 1990’s Malaysia in 1994/1998 and even South Africa.

It is acknowledged globally that Capital Controls tend to promote financial stability, promote desirable types of investment that create jobs and enhance democracy and national autonomy by reducing the power of global speculators from exercising undue influence ever domestic policy and exploitation of national resources.

Zambia’s Policy of excessive preoccupation with inflation is misplaced. Issues of growth and employment should take priority. Monetary policy must be one that responds to needs of the Middle Class and Ordinary household in the real domestic economy rather than to the foreign Investors, hedge Funds, Banks and speculators who currently dominate Zambia’s financial “bubble” economy. Fiscal policy frame work must be one based on a progressive taxation system instead of the regressive regime that currently holds sway. The continued reliance on foreign financial flows as an option for progressive domestic taxation is neither desirable nor a sustainable development strategy. Zambia needs an economic policy rooted in domestic savings and a domestic market by enhancing and expanding the purchasing power if its people and not by being dependent on external aid, grants or loans as agents of growth. Zambia needs to adopt a discriminatory approach to Foreign Financial flows. The FDI that has come most of it by way of mergers and acquisitions, has had limited effect on employment creation. It has negatively impacted on Zambia’s balance of payments and there hardly has been any technological transfer.

National capital controls for Zambia is therefore an essential element to make sure that Zambia is able to ensure that its forex outflows are not exceeded by or grossly mismatched with its forex earnings and, overall, to allow Zambia a measure of economic and political sovereignty in this era of borderless globalization. The current global consensus is that Capital controls are essential in today’s world of integrated Financial Markets. All Asian Governments have cleverly imposed Capital Controls and cut interest rates and have continued to promote fiscal expansion. Free Capital mobility as argued by the IMF and their neo liberal friends through their agenda of Capital Account liberalization, has not been associated with high rates of growth and poverty reduction. Free flow of capital endangers the autonomy of countries such as Zambia.