For a long time, Zambia has occupied a rare, enviable niche in African politics as a reliable laboratory for the peaceful transition of power. The Southern African nation has repeatedly defied the continent’s stereotypes, using ballots rather than bullets to unseat incumbents since the debut of its multi-party era in 1991. Zambia possesses some of Africa’s most attractive long-term fundamentals, boasting of large copper reserves, a strategic position in Southern Africa, abundant renewable-energy potential and a young, and increasingly urban population that promise immense prosperity to investors.
However, investors have often stumbled over weak contract enforcement, unpredictable regulation and patchy rule of law.And as President Hakainde Hichilema and his United Party for National Development (UPND) seeks re-election in August, 2026, Zambia’s legal credibility will also be on the ballot.
Zambia defaulted on its sovereign debt just six years ago, but has staged a remarkable rehabilitation with the finalisation of an IMF programme, the return of mining giants like Vedanta, and the appreciation of the kwacha. Working together, these macro developments have turned a profligacy parable into a parable of policy normalisation.
Against this background, this week’s MacroFiscal Risk Africa previews the factors that domestic and foreign investors should watch. It also explores the agenda that the incoming administration could pursue to mitigate these inherent risks.
The anatomy of contractual, legal, and regulatory risks
Businesses in Zambia have regularly confronted complex contract enforcement environment and regulatory uncertainty. Now, the pre-election environment adds new layers of frictionwith politicised regulatory shifts at the fore.
For instance, the Bank of Zambia introduced the Currency Directives of 2025 as it sought to stabilize the domestic monetary system, assert national sovereignty, and manage a volatile macroeconomic landscape. This framework requiresall domestic transactions to be settled exclusively in kwacha,the local currency, thereby introducing transactional glitchesfor foreign investors whose capital structures and cross-border supply chains are deeply dollarized. Unexpected compliance vulnerabilities and currency risks are then the logical consequences as contracts originally priced in foreign currencies must navigate complex local conversion mechanisms. Meanwhile, political uncertainty can increase exchange-rate volatility by affecting investor confidence, capital flows, and market expectations.
Even though Lusaka recognises statutory and customary lawand has ratified the New York Convention on arbitration awards, even though the courts still enforce arbitral decisions, enforcement still in practice lags as resolving a commercial dispute through the courts can take up to 600 days. This causes added costs and delays, compounded by under-resourced judges, backlogs and allegations of political influence. Additionally, property rights are clearer in urban areas than rural ones, where customary tenure dominates and state ownership of land forms the foundation of allocation.
Mining vulnerabilities, corruption and procurement risks
Mining is the bedrock of exports and Foreign Direct Investments (FDI), and sits at the heart of othervulnerabilities. Past governments under Edgar Lungu of the Patriotic Front were mired in high-profile disputes like the seizure of Konkola Copper Mines (KCM) from Vedanta and tensions with other operators. The current Hichilema’s administration has sought to repair relations, for instance, by handing KCM back and settling other claims, and introducing local-content rules to channel more contracts to Zambian firms. Despite aligning with the wave of “industrial nationalism” push in other parts of Africa, it introduces new regulatory uncertainty around licensing, royalties and value-addition mandates. Also, investors fear retroactive policy shifts, especially in the event of heightened fiscal pressures.
What about corruption and procurement risks? You are right if you think they worsen these anxieties. Bribes and other irregularities have besieged public contracts, particularly in infrastructure and mining. These have made selective enforcement fears sticky despite the current government on anti-corruption drives like asset forfeitures and fast-track courts. The judiciary has been criticised for lackingindependence as executive influence pervades appointments and removals. This will, hopefully, be buried with effective passing and resourcing of the planned Alternative Dispute Resolution (ADR) Bill 2026, which aims to modernise arbitration, mediation and construction adjudication.
The local content time bomb
The Statutory Instrument No. 68 of 2025 that mandates local procurement quotas in mining represents one of the most significant regulatory risks. Mines are mandated to allocate 40 percent of procurement to local firms within five years. While this is politically astute, the implementation is fraught with peril.
The new Local Content Access System (LOCAS) digitises penalties, automatically demanding up to ZMW 400,000 (US$22,400) fine from violators for each breach. But it becomes difficult for one to identify the difference between enforcement and extortion in an election year. History has taught us that local content rules in resource-rich nations often mutate into rent-seeking vehicles for elites with politicalconnections. For instance, if a minister can determine who qualifies as a “citizen-empowered company” under the Citizens Economic Empowerment Act, the regulatory process becomes a political weapon. Hence, investors are watching; they are eager to see if the Smart Zambia digital platform will be used to enforce the law equally or to subdue rivals before the vote.
Election proximity and heightened risks
With August 2026 approaching elevated risks are evident from historical experience. Very often, Zambian governments had tightened control or engaged in populist measures before elections. Major concerns under Hichilema border on the use of the Public Order Act to restrict opposition rallies, cyber-security laws that could enable surveillance, and broader intolerance of dissent. While the 2021 transition was largely peaceful, fragile democratic institutions and politicised state bodies raise fears of post-election disputes or policy reversals.
Accordingly, investors need to monitor three (3) criticalfactors. First, investors should monitor fiscal discipline against election spending. This is because increased pre-poll populism like subsidies, public hiring or loosened spendingcould undermine recent IMF-backed consolidation, debt restructuring gains and currency stability.
Second, investors should look out for regulatory volatility in major sectors, such as changes to mining taxes, local-content enforcement or land allocation. New critical-minerals initiatives or state entities could signal greater intervention. Again, they should be mindful of signals that undermine contract sanctity. These may appear in form of preference fordomestic dispute-resolution mechanisms over international arbitration.
Third, judicial and institutional predictability should be on watchlist. Case backlogs, perceived bias in commercial or procurement disputes, and the fate of the ADR Bill will signal commitment to rule of law, while independence of the electoral umpire will influence post-poll stability.
A post-election agenda
All said and done, whoever sits in State House after August 18 must recognise that Zambia has a future that resides not only in its copper mines but as a jurisdiction. As such, the incoming regime must pursue a tripartite agenda to reduce legal risk.
Beginning with the decriminalisation of contract disputes, the government must issue a binding directive that commercial contract breaches will be handled by arbitration or commercial courts, not the police. The current practice of using criminal abuse-of-authority charges to resolve payment disputes as seen in the Zambia Medicines and Medical Supply Agency (ZAMMSA) case must die.
Second, the judiciary must be properly funded, away from the present situation of chronic underfunding. For the new regime, a legislation that automatically adjusts the judicial budget for inflation and constitutes a fixed, non-negotiable percentage of the national budget is a sine qua non. If Zambia cannot adequately fund its judiciary, it must stop pretending to offer secure investment.
Third, the new regime must pause the post-2025 regulatory frenzy and end the “enforcement surge”. The incoming administration should impose a moratorium on new “ministerial regulations” that affect mining and energy for the first 18 months of its term, to signal that the rules of the game are stable and will not change with the weather.
The bottom line
For MacroFiscal Risk Africa, weak contract enforcement is a tax on investment and growth, and Zambia’s reformers must understand this. The upcoming election will test whether rhetoric translates into durable institutional change. Investors should price in short-term volatility but reward credible, multi-year commitments to rule of law. Failure to do this, will condemn the country to risks unending boom-bust cycles, and of disappointment.
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