Zambia: UPND Majority May Shrink, Negatively Impact Policymaking

What happened: Rising frustration over living costs and electricity shortages could reduce parliamentary support for the ruling United Party for National Development in the upcoming parliamentary elections in August.

Why it matters: A reduced UPND majority would make it more challenging for the government to advance fiscal and mining reforms and implement measures to improve the investment environment.

What happens next: Zambia's business environment will likely be slow-moving and uneven throughout the decade as the government — particularly Finance Minister Situmbeko Musokotwane — tries to balance voter demands with economic needs.

President Hakainde Hichilema is well-positioned to secure a second term in Zambia’s general elections, just two months away. His governing United Party for National Development (UPND), however, is facing several public vulnerabilities, including rising living costs, electricity shortages and dissatisfaction over the pace of economic recovery

Those vulnerabilities may prove consequential, particularly in the parliamentary race — even with a still-fragmented opposition. Economic frustrations have mounted, particularly in the mining-dependent Copperbelt region, making the contest for legislative seats more competitive than it was in 2021

Slower Processes

With 66% of seats, the UNPD enjoys a comfortable position in parliament. The administration has avoided the legislative gridlock that can complicate reform efforts.

That may become more difficult after the election: Although the UPND will likely be the largest party in parliament, we expect its majority will be significantly reduced as economic frustrations translate into electoral losses in key constituencies.

A weaker parliamentary position would increase the influence of individual MPs and internal party dynamics. We anticipate challenges in the administration’s efforts to maintain politically costly fiscal consolidation while also mobilizing investment in electricity generation, transmission infrastructure and other enablers of copper-sector growth.

Investor Implications

For investors, the most notable change will be the government’s policymaking capacity. A more constrained political environment will limit the government's ability to translate commitments into action at a moment when both US and Chinese partners are hungry for copper. This includes investment into transmission infrastructure, road rehabilitation and progress on the Zambian portion of the Lobito Corridor.

Policy direction will be predictable, and we expect the government to maintain its focus on rebuilding relations with the IMF, strengthening engagement with Western governments and positioning Zambia as a stable investment destination.

However, we expect slower implementation and more frequent delays as political considerations shape decision-making. This will likely be most visible in areas such as copper production drives, spending squeezes and the expansion of electricity generation capacity.

Spending Pressures

Zambia's relationship with the IMF and the government’s broader efforts to maintain fiscal discipline will make governance constraints visible. The first Hichilema administration came to power amid a severe economic crisis, which generated political acceptance of difficult but necessary reforms.

However, as macroeconomic conditions have improved, public pressure is rising to prioritize spending and interventions that deliver more immediate benefits. This is evident in the energy sector, where Minister of Finance and National Planning Situmbeko Musokotwane (see Featured Personality) has prioritized electoral considerations over fiscal discipline.

To mitigate the electricity crisis before the election, the government increased power imports through the Southern African Power Pool. This reduced the severity of load shedding, but increased costs, and industry contacts said the approach is not financially sustainable over the longer term. As a result, many expect the extreme electricity shortages seen throughout 2025 to return from 2027 on.

Transmission infrastructure is also not being tackled to the same degree. During the electricity shortages, the Mines Ministry called for reduced production to ease pressure on the grid, a move at odds with a government targeting its highest-ever copper production.

The administration has deferred negotiations for a successor IMF program until after the election, as the government tries to swerve criticism from the IMF and the electorate. Restarting discussions with the IMF will become more challenging if the UPND loses its majority.