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Alba Iulia
Friday, September 24, 2021

MMD’s de-registration increases Fitch’s concerns over policy direction and governance quality in Zambia

Headlines MMD's de-registration increases Fitch's concerns over policy direction and governance quality...

FILE: MMD cadres
FILE: MMD cadres

Fitch Ratings says that additional strain could be placed on Zambia’s (‘B+’/Negative/’B’) government finances and its relatively strong governance undermined if the Registrar of Societies’ decision to de-register the country’s official opposition party is not overturned by the courts.

On 14 March, the Registrar of Societies announced that the Movement for Multiparty Democracy (MMD), the party that lost last September’s election after two decades in power, would cease to operate as a political party due to the alleged non-payment of dues over the past 20 years. The registrar called for by-elections for the 53 parliamentary seats held by the MMD.

In Fitch’s view, it is too early to tell if this is simply the actions of an over-zealous official, or whether the decision was politically motivated, with negative consequences for democracy and governance, factors which Fitch has traditionally regarded as amongst Zambia’s rating strengths. However, the agency’s revision of Zambia’s Outlook to Negative on 1 March 2012 reflected Fitch’s concerns about some of the government’s early actions and announcements, which have brought into question the direction of government policy. This latest development only increases the agency’s concerns over policy direction and governance quality.

It is not obligatory under the Act for the Registrar to suspend a society that has not paid its dues. Furthermore, a society should be given at least 21 days to respond to any allegations. In addition, the Registrar does not have the authority to dismiss elected parliamentarians and call for by-elections. The Registrar may therefore have overstepped its mandate. The high court has subsequently halted the suspension and ruled that by-elections to fill the party’s seats in parliament must await the outcome of a legal challenge to the suspension.

However, even if the decision is overturned by the courts, Fitch highlights again the risks associated with sending a negative message on matters relating to economic policy, property rights and respect for the rule of law. This is particularly the case in a year that the government will seek to raise USD500m from international capital markets in a debut eurobond.

If the decision to de-register the MMD is upheld and by-elections are called, there will also be adverse fiscal consequences. Holding elections will put unnecessary strain on the budget or divert funds from much-needed capital spending. Furthermore, if donors believe governance is deteriorating, they could decide to suspend aid, which makes up 7% of government revenue. This has been a response to similar events in other aid recipients in Africa and elsewhere in the past. It also risks sparking political instability, particularly given the support the MMD still garners in rural areas.

Fitch will continue to monitor this issue closely, and the government’s actions and policy announcements more generally over the coming months. Evidence that the fiscal position is being damaged and growth eroded through a weaker investment environment would have negative implications for the rating.

[Reuters]

81 COMMENTS

  1. The PF apparatus need to stop being stubborn

    People are Irrational Financial Investors. They put more weight on recent events than far-off ones and are not particularly good at calculating probabilities. Similarly, they don’t react very well to loosing cash.
    They are prone to hang on investments since they have a strong sense of possession (EC)

  2. .
    This is close to heart. We have preached about the predicaments on the issuing of the Sovereign Bond and how important it is that this government conducts itself noblest. We have those that will disregard the discourse by avoiding hearing the truth, but rather arguing using emotions just because they cannot disagree with their beloved PF

    Yes, the truth hurts, but its always better to live in the reality and not pretend that Zambia can get away on the international markets, if leaders are reckless with thier Oral Cavity.

    I have commented on this issue and gotten called a disgrace. Well, this is a reality.

  3. This is a dent on Zambia and its democracy. The Registrar of Societies acted on the powers vested on its mission and obligations. I think they should have sought a COURT INJUNCTION 1st to demand that MMD settles its dues then failure do so would see them removed from

  4. MMD is not above the law. They need to pay their dues! Unless they do, they should remain out of commission.

    • I thought you were going to study for an MA in the USA but you fail to understand the implications for Zambia if MMD is de-registered? You really did Boston Uni a favour by taking your dull brain elsewhere as students such as yourself would surely dent the reputation of the respected institution.

  5. The Fitch Ratign thing should stop meddling in our national issues, of course the deregistration will handled within thsi confiens of the law. That is why they have gone to the court and the courts will make a decision, based on law.
    Fitch must be taold they can be cited for contempt of our courts for insinuating that only one outcome from this case would be prefferable!!! Come on, go rate Greece, again!!!!

  6. .
    Anyone that lives in western nations can attest that when you walk into a bank to apply for a Loan, Credit Card, Bank Account, Mortgage, you go through a credit check process by Credit Agencies to determine if you are credit worth or qualify to obtain credit and at what percentage rate

    The same principle applies when Zambia goes on the International Markets. Lenders, Nations and Investors do enquire from these Sovereign Credit rating agencies to assess Political Risks, Economical Risks, Capital Risks etc

    Similarly, when you apply for a job, an employer will seek references, probably from your last employers to determine if you are employable and asses the risk of hiring you.

  7. I think Andeleki or whatever his name is ,is about to be fired.Watch this space.His 15days of fame are over.Sata has fire or reshuffled everyone who gets big headed.Look at Malama,Kambwili et al

    • You’re very naive, you think Andeleki is working independently? He is being used by Sata who wants to create a political monopoly.

    • Deep throat – don’t you know Sata by now? It doesn’t matter if Andeleki is under instruction,Sata can still fire him if he sees he is bound to lose.What of the U – turn on Chinese,windfall tax,reduced cabinet,the many peole he appoints then back tracks.Sata is clever don’t underestimate him.He keeps his friends close and his enemies even closer.

  8. The perception being created, perhaps wrongly, is that Zambia is not being governed by democratic institutions. In the past few months, how many executive directives, as opposed to parliamentary resolutions, have been implemented in the Country? Perception must be managed or else we are doomed!

  9. and who na fitch and wha dey stay. help na me whoooo. na not no na what na fitch does oooh..chineke.na me na standrdnd six drop out. me  na simple former na clonial costable na polish shoes for na colonial masters in london oooooh. 

  10. This is the price you pay when you put old madmen in power. There is only one winner when it comes to Sata’s presidency–Sata himself. Sata’s and his relatives fortunes have changed while Zambians are sinking deeper into economic woes. He has only been in office for barely six, and the damage already done to this country will take decades to correct. What were you thinking when you elected this man? Perhaps we are past that question. The question is, what can you do to correct the situation? This country doesn’t belong to Sata and his outfit of the absurd. It belongs to 13 million Zambians. You all need to remind him that. Look for a 21st Century leader who can steer this country towards the future. Reclaim your country. This is a young country, you don’t need such old people in power.

  11. is Fitch saying it doesn’t concern them that the MMD was so careless that it didn’t comply to a point that their debt reached such alarming levels???

    Cheap politics, give us something of substance, this is a simple case give to Caesar what belongs to Caesar and to the registrar what belong to him  

  12. UKWA the grade 7 constable. Andeleki told Ukwa that it was not feasible to deregister the MMD being the biggest opposition party, but Ukwa pressed the boy to go ahead promossing him of serous backing. Now he is planning to fire the boy to save face

  13. Ukwa is too small and unsophisticated a being to the likes of Egypt’s Mubarak, Libya’s Qaddafi and Uganda’s Amin his protege all tried but crashed by the democracy movement ukwa is dreaming to reverse and asphyxiate with impunity. 

  14. #13 i only hope u aint tellin us that hh is supposed to be the one-only in your dreams!i concur wth one of the bloggers who said the pf govt should manage PERCEPTION & its very true because most of the so called damage by ths govt is perceived.they should engage stakeholders & explain to the nation wat they are doing eg weekly briefings by chief govt spokesman.pf wake up,zambia aint an island!

  15. This being the same Fitch that last week was being pooh poohed on the media here for threatening to downgrade the UK :) Am still against the MP’s being tossed from positions but continue to hold the view that MMD non payment is worth nil points. And when will the cheque be delivered?

  16. Let’s not tolerate indiscipline. MMD has errored, nothing to do with Fitch (or Finshi ififine). Forget Fitch, MMD should just pay inkongole. PERIOD!

    • Thinker you are spot on. We need pipo with proper reasoning such as yourself.

      Theres nothing sinistr about this. What was sinister was the moves the MMD used to make such as chnging the consititution cause they didnt want particular individuals to stand in elections. If the MMD can prove that they are up-to-dat with payments thsy should dully be allowd to continue business as usual, if not, off they go. Period!

    • Forget Fitch, and your PF morons what to borrow money on the international money markets? Watch this space? How are you going to finance all the 90days lies you made to people??

  17. It is very difficult for Africa to attract FDI at the best of times. When you have a comedian like Ukwa at the helm it is nigh on impossible despite what those with heads buried in the sand would have you believe. Truth is, international markets were not happy with a Sata victory but played a wait and see game to see what policy direction he would take. In the six months he has been in power he has already fulfilled their worst fears and unfortunately for Zambia, as long as Ukwa and Dr Kaseba are ensconced in the newly refurbished state house, the economy is headed in only one direction and that direction is PANSI.  RB’s vindication will happen much sooner than some of us thought. Cry the once beloved country!

  18. These people should go hang. The law is the law. If MMD owe money they should pay. If the pf are just playing politics why havent they targeted the UPND who are equally a big party and mayb an even a stronger threat than the MMD.
    They should leave us alone

  19. This Fitch thing has no work to do. How can they stay fixated like this? Zambia is not the only country where governments are trying to implement their laws.

    What is Fitch’s opinion over Putin winning the Russian  Presidency, or over Iran’s nuclear advances or China’s politics or the UK’s plans to “privatise” some roads?

    Could it be that Fitch have been hired to specifically focus their manipulative activities on Zambia during the reign of the PF?

    Finshi ba Fitchy?

    • BA Gundix, are you actually in the UK? I wonder what you read? The Star, I venture a guess. 

      Zambia is courting the international markets for funds. The cost of borrowing, interest rates and all, will depend on its ratings including the risk investors attribute to Zambia. If borrowing from the markets does not matter to you then we wish you well. Spare a thought though for the unemployed and the poverty stricken relatives back home. Developing Zambia is cardinal and not merely a political game.

  20. It’s shocking that some bloggers above still think de-registering the MMD is a prudent thing to do! LAZ and Fitch Ratings have given us their well thought out rational responses yet PF supporters are desperately trying to cling onto false hopes that Ukwa will miraculously come to his senses? We’re doomed people, brace yourselves. Even the late Kafupi (master dribbler) told you that he did’nt anoint Cobby as his successor because the man is a functional illiterate; he’s probably having the last laugh in his grave.

  21. The wise thing to do at the moment is to postpone the $500million Bond issue. This Government has just shredded investors confidence and that money will cost us a lot.

    We should postpone the bond issue until there is clarity and stability in the policy direction of the country , otherwise we shall be digging a bigger hole for our children than that left by UNIP. The cost of borrowing will just be to high. This is not the right time to borrow. Let them just use some of the reserves that MMD left.

  22. why cant mmd just pay. they want to derail PF s programme by running to international organs so that they can look like they were better. george kunda runs to UN to complain, MMD does not want to pay so that they can toy with the Fitch ratings.

  23. The MMD changed the Societies Act in 2004 to fix the Oasis Forum and other NGOs that were making noise about questionable MMD positions such as Chilubas third term bid, constitutional review and election monitoring. George Kunda knows very well about this, that is why he is making noise quietly.

    This same law they created THEMSELVES has jumped up and chewed them in the arse. I do not see why we should be black-mailed by international credit ratings on this one. As some have already said, forget about the bonds, make MMD pay. There must be some other way that government can raising funds. Increasing exports and tourism by short term devaluation of the Kwacha is one option, but that wisdom may be too high for some. Just sneak the it in when the new notes and coins come in to the system

  24. #30, Please be reminded that the Cobra was chief architect of third term and MMD national secretary then. Were you born yesterday?

    • Well, he was smart enough to quit the losers club. But tell, me, how exactly does this exempt MMD from paying the money owed given that you have been around longer than I have been?

  25. whether fitch or no fitch the MMD as a party and government even individuals were corrupt, a government whhich allows its uniformed personeel

  26. FOOLISH ZAMBIAN why support a party that took Zambians for granted. They never paid anything and abused government funds just to enrich themselves. Think and feel for Poor people in rural areas, with no proper facilities. I would love to see MMD Suspended completely, would not miss that thieves party by any chance, as they became so complacent. They are in arrears in everything including stealing.  

  27. # SHEIKH, no one is supporting the previous government. We’re concerned about the country at its future. The reason why the previous government acted with impunity is because of weak opposition. You can’t allow that to happen under this government. You must also remember that the current president epitomized everything that was wrong with the MMD. He was convicted of having stolen money from the Merzaf project in Chilenje. He was also involved in the disappearance of several billions of kwacha over which he is suspected to have executed Paul Tembo who witnessed the embezzlement. It is that straightfoward. Just because he is in the State House under a different political party doesn’t change his character. He is still the same thief and suspected murderer.

  28. you guys can say all you want but what the fitch group says affect a country take a look at europe for democracys sake i hope mmd wins there appeal i’m not a fan but we can’t be turned into a one party state

  29. If we do not get rid of this Satanic heart diseased lunatic from power any time soon, there will be no economy remaining to talk about. I mean, the nearest comparable Sata has to an economy is Nabwalya, a stinking ‘shatini’ where ‘kolwes” rulle supreme.

  30. The world is a global village and every nation is endeavoring to tap into the same basket of investors hence the competiveness. Conversely, investors are attracted by, among others, a conducive environment, economic stability, political stability. Annihilation of opposition parties be it covert or overt is a defeat of democracy. Lack of democracy entails no checks and balances, a dearth of transparence and in such a poisoned environment, investors are pushed back.  There is nothing to be upbeat about our situation right now and considering the missteps  made, people have every reason to 2nd guess the leadership.
    A lesson can be learnt from Mandela. Despite his persecution, he championed democracy and unflinchingly allowed the party that persecuted him to exist. Hence his reverence

  31. Use the statute of the Registrar of parties to postpone their re-registration until they pay their Dues. Why are people not understanding that this was done in our interest to show that no one is above the law. Some Zambians have been stepped on too long when the see justice the think batu kaniwa really! I am not PF, but the civil servant did good on this one. Do business with east Asia, the don’t treat us like children at national level at least.

  32. Some of you natives have never analyse issues in your lives.Fitch has had issues with countries like the UK challenging them.
    Anyway on a very lighter note,Zambia was mentioned in the SUN today as some of the few African countries whose economic growth is surpassing that of the UK.
    LusakaTimes kindly report on this good progress so some narrow-minded people can at least see the good side.

  33. Sasa zambia imeona ujinga wa kuweka mafisi wenye elimu ya chini kuongoza nchi.Huyu mjinga Sata anaongoza kama mzee wa kijiji badala ya kuongoza kiufundi.Fitch wameona maamuzi ya Sata yanadhuru uchumi wa zambia lakini sababu ya elimu ndogo sata hawezi ona siasa zake zinadhuru uchumi.Huyu mzee mjinga sana na ni dikteta.Watu walimwondoa RB ambaye aliimarisha uchumi zaidi wakamweka mjinga wa kijiji.Rudisha hii mavi inaitwa sata kwa mji wake kwani hafai kuwa rais.

  34. This development of national issues as they stand now vindicates our views that MMD CAN NOT / WILL NOT BE DE-REGISTERED. Its not MMD members to fight for fair treatment of their party but the world at large to which Zambia is part have began to rise and speak for mother Zambia. You may like or hate it, truth always catches up with those spewing vicious hatred without basis. How can we risk our country from carelessness for the sake of populist hua-ha rhetoric. This issue was resolvable without attracting Fitch ratings on Zambia. Once a record is made on ratings it speads to all international players. Did the Registra foresee these implications? A lot more international players will express their views on governance in Zambia. A big dent to go over it and damage limiting will be hard.

  35. Fortunes do change dramatically and this can cause shock to our economy and the people. Our economy can dip down the tank very easily and all the recipes are there. We need a level headed leadership with an understanding of the world view, economically and otherwise. We need someone who is going to be “a steady hand on the tiller”

  36. …triple A rating given by Fitch and other credit rating agencies to sub prime mortgage lenders equals ‘Oops! Global Financial Meltdown’ – Just sayin ‘. They have been wrong before :) Has the cheque gone out yet, MMD?

  37. There is even a bigger picture to this that has not been discussed enough in my view. If MMD have not been paying since 1993 (although they claim that they have been paying and have the receipts to prove it) does it mean that in essence the country has been ruled by an illegal govt since for 18 years? Does it mean that all laws passed between 1993 and Sept 2011 are null and void? What about the treaties that the country has signed during the period in question and does it effect the legality of Sata’s presidency as it would mean that RB was president illegally and therefore had no constitutional powers to set the date for the previous election?

  38. The problem with some of you bloggers, you do not understand the repercussions of losing a credit rating. Especially you bloggers in the third world countries, where it does not matter whether you have good or bad credit. A good credit rating for Zambia means the cost of borrowing will be lower than if the was credit bad. To grow an economy, your need access to capital. The easiest and fastest way to acquire capital and get out of poverty is to have access to credit. I can`t educate you bloggers on the need to have good credit rating. Go and study FIN 101.

  39. # 47. Totally agree with your views. The implications of de-registering MMD has far more dire consequences than the crude mere populist agenda we note in PF govt. This was the same case when George Kunda stated that Guy Scott is impotent over his title as Vice President. This attracted a hokum chorus of protest from Kaponyas after UKWA hoo-haa. In no time PF capitulated that Guy Scott can not legally act as VP (republican). GK Vs entire PF found wanting in law promted by GK. GK= 1, PF = 0. Deregister MMD at own peril. Read commentry of opposition leader in Botswana being directed at UKWA as visiting president. What a SHAME.

  40. MMD pay quickly and avoid deregistration, well wishers contribute to save MMD instead of bleaming PF.Advise to PF get to work and avoid attending to rubbish.

  41. FITCH are bit of an ITCH in the A’r.se!!! They are not donors, THEY SIMPLY ARE SPECULATORS & profit from doing so! SUPPORTING ILLEGALITY NEVER STRENGTHENED ANY DEMOCRACY, so can these si.lly speculators go elsewhere & peddle their wares!!

  42. FITCH & Other SPECULATORS, for all that they are worth, FAILED OUTRIGHTLY TO PREDICT, PREVENT OR AVERT THE GLOBAL FINANCIAL CRISIS, so for all “THEIR CHEST BEATING”, please give a break, OUR DEMOCRACY IS RUNNING ITS COURSE BY THE LAWS THAT GOVERN THIS COUNTRY!!!

  43. “DEMOCRATA”, your FIN 101 is simply theory & NOT FACT, ask yourself why it FAILED SO MISERABLY FOR THE GFC!!!!!

  44. “In addition, the Registrar does not have the authority to dismiss elected parliamentarians and call for by-elections. The Registrar may therefore have overstepped its mandate.”

    It beggars belief that FITCH seems to misquote the registrar & base their decision on such a misquote, FOR THE REGISTRAR CLEARLY STATED THAT HE HAD WRITTEN TO THE SPEAKER ON DEREGISTRATION, what was to follow, was the speakers decision.
    JUST SHOWS THE QUALITY OF THEIR SOURCES OF INFO, I suspect they rely on “TUMFWEKO” & “WATCHDOG!!!!”

  45. What Ukwa and Andeleki don’t understand is that there are three major credit rating agencies based in every major financial centre of the world from New York to Tokyo. These three credit rating agencies are Fitch, Standard & Poors and Moodys. Ukwa should know that the opinion of these organisations is respected by all the major players in financial markets. Sata’s illiteracy will take Zambia 70 years back and it is must said that Sata & PF are a total joke and disgrace to Zambia. PF cadres on this blog must ask themselves: where will Zambia get money for social services like roads, railways, hospital drugs etc?  

    • Why do you imprison yourself and want everyone to follow the same pattern of servitude owing IMF / World Bank money? South Korea refused to keep borrowig money and have set themselves economocally free from these institutions perpetuating modern slavery. The Fitch people are just spanner boys of these big institutions who only see Zambia as a playground to make more money.

      All I am saying is FREE YOURSELF BIATCH.

  46. have a perspecting ba mumbwe imwe. What is the rational of de-registering MMD and have by-election that ill put a strain on our reserves. MMD is a party that has the ability and capability of bailing itself. Why doesn’t the registra of societies enter into a payment plan and save Zambia from doing 50+ by-elctions?

  47. Zambians have stopped thinking bcoz of blind loyalt to sata who was in govt from 91 to2001 when zed economy was worse until when mwanawasa resustated it to where sata has come to finish it

  48. Democracy is like heat and cold, sugar and salt, dry and wet, sorrow and happiness, eating and defacating, breathing in and breathing out, oxygen and carbon dioxide, or speed and brakes. With exceptions of those born after ’80s, we all know what a one party state can breed even in hands of good men. KK and his socialist colleagues like Mainza Chona et al were good men. And yet human rights abuses and economic troubles bedevileed our nation. MMD, the biggest opposition, is as much important to our enjoyment of the rule of PF as breathing out or going to the toilet is important for our survival. So Bwana Andeleki, I offer you advise. Get a writ of fifa or garnishee order against the 53 parliamentarians for ZK7 million each. We love PF and need MMD, UPND, ADD, NAREP etc

  49. EXCUSE ME

    Why do we Zambians rush to acting so diplomatic, so analytical and so concerned about the fate of our economy when it comes to THE LAW taking its cause??? was the decision out of Amaleki’s head or is it not what the LAW demands??? who gives a danm what fitch, Obama, UN or whoever thinks when it comes to our RULE OF LAW??? Lets think with our HEADS be strong minded and real about issues and not always SCARED of “ECONOMICAL DOWGRADE” of the unknown.

  50. It looks like MMD managed to corrupt even the world’s renowned credit rating agency! Fitch stinks. The world is watching their behaviour, and I must say it leaves much to be desired. In the midst of Fitch’s nonsense, the serious investors are on a daily basis investing in the various sectors of our economy. Why have they not halted their investments? Because they can differentiate between nonsense and business, between rational/sound investment advice and skewed/nonsensical advice. Fitch, who runs this organisation?

  51. Fitch, let MMD comply by paying then you can consider the rating. Lets balance things. I do not need to teach you what to do. You are paid for your job.

  52. You may hate the MMD but they left a strong economy growing at 7% GDP. They left single digit inflation, they left US$3bn in foreign reserves, they left all the silos full of maize and they left large investments which Sata is now commissioning. As to corruption, this is just a myth created by Fred Mmembe who believes in the maxims of Josef Goebels that ” if a lie is repeated often enough people will begin to believe it”. Indeed many morons repeat Mmembe’s lie without thinking. If for instance Zamtel was corruptly sold, then who is being prosecuted for the corrupt sale. All we hear are prosecutions over bicycles. The government has GRZ bonds to float this year and if it is not serious with governance the bond issue will be a disaster and the budget will go through the window.

  53. I hear four messages from bloggers:
    1. That the enforcement of some of our laws should be negotiable while others should be enforceable without negotiations with the offenders!
    2. That the MMD is the definition of Democracy!
    3. That cost is the major consideration in the interpretation and enforcement of laws!
    4. That Fitch votes and respects Zambian laws!

  54. Are we paid money for being rated A+ or B+ by these guys? Why should defend the defaulters people who dont want to pay? If this will be the situation even other parties next time they will not pay because this fitch what ever will defend them. If they (MMD) can not pay de-register them completely

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