Zambia's Post-Lungu Political Landscape: Navigating Risks and Opportunities in Mining and Infrastructure

The death of former President Edgar Lungu in June 2025 marks a pivotal moment in Zambia's political trajectory. Under current President Hakainde Hichilema's administration, the nation faces a complex blend of democratic backsliding and economic potential. For investors eyeing Zambia's mining and infrastructure sectors, this presents a high-risk, high-reward environment. Let's dissect the challenges and opportunities.

Political Stability: A Mixed Picture

Zambia's Political Stability percentile rank, per the World Bank, stood at 52.13% in 2023, placing it mid-pack globally. However, recent developments under Hichilema's leadership threaten to erode this progress. Key risks include:
- Judicial Overreach: The dismissal of three Constitutional Court judges in 2024, amid disputes over Lungu's eligibility for the 2026 election, undermines judicial independence.
- Election Uncertainty: Hichilema has hinted at delaying elections for up to nine years without constitutional reforms, raising fears of prolonged political instability.
- Civil Liberties Restrictions: Arrests of journalists and opposition figures, such as the 2025 detention of reporters covering protests, signal a tightening grip on dissent.

Despite political risks, Zambia's economy is projected to grow at 6.6% in 2025, driven by copper exports and infrastructure investments. However, inflation at 12.1% and public health crises like the ongoing cholera outbreak (over 23,000 cases since 2023) complicate stability.

Mining Sector: A Core Opportunity

Zambia is Africa's third-largest copper producer, with reserves valued at billions. The sector accounts for 70% of export revenue and offers robust opportunities:
- Global Copper Demand: Rising demand for EVs and renewables positions copper as a strategic commodity. Companies like Glencore (LON: GLEN) and Vedanta Resources (LON: VED) operate major Zambian mines, benefiting from stable prices.
- Policy Uncertainty: While the government has streamlined mining taxes, opaque regulatory changes (e.g., revisions to the Minerals Development Act) could disrupt operations. Investors should monitor policy consistency.

Recommendation: Engage in long-term partnerships with established miners or invest in ETFs like FC copper, which tracks global copper equities. Avoid ventures requiring immediate regulatory approvals until policy clarity emerges.

Infrastructure: High Risk, High Reward

Zambia's crumbling infrastructure—evident in its water crisis (700+ cholera deaths since 2023)—creates demand for upgrades. Opportunities exist in:
- Transport and Energy: Upgrading rail lines to transport copper and developing solar projects could attract funding. The China-Zambia Economic Corridor initiative, backed by Beijing, is a prime example.
- Water and Sanitation: Public-private partnerships (PPPs) for water treatment plants may gain traction, though corruption risks remain.

Caution: Infrastructure projects require robust legal frameworks. Investors should seek projects with World Bank or AFDB guarantees, which mitigate political risk.

Mitigating Risks: Key Considerations

1. Monitor Constitutional Reforms: The proposed Mixed Member Proportional Representation (MMPR) system, while flawed, could stabilize politics if implemented transparently.
2. Leverage International Partnerships: Engage with EU or UK-backed initiatives (e.g., the EU Human Development Programme) to navigate social and environmental concerns.
3. Diversify Sectors: Pair mining investments with infrastructure projects to balance exposure.

Conclusion: Proceed with Caution

Zambia's post-Lungu era offers undeniable potential in mining and infrastructure. However, investors must navigate judicial fragility, election uncertainty, and social unrest. Focus on sectors with global demand resilience (copper) and third-party-backed projects (infrastructure PPPs). Monitor political stability metrics closely—should Zambia's World Bank stability percentile drop below 50%, reconsider exposure. For the bold and patient, Zambia remains a frontier market worth watching.

Final Take: Zambia is a “high beta” investment—volatile but rewarding for those who can stomach the risks. Prioritize transparency, diversification, and partnerships to thrive in this dynamic landscape.