Citi Sees Zambia’s World-Best Local Bond Rally Extending After Polls

BREAKING NEWSJuly 24, 2026 at 10:56 AM UTC

TLDR

Zambia's local currency government bonds have seen a world-leading rally, up 36% in U.S. dollar terms this year.
Citigroup believes President Hakainde Hichilema's victory in the Aug. 13 election could attract more foreign investment.
Foreign investor confidence in Zambia has increased due to fiscal reforms and stronger copper exports under Hichilema's administration.

Zambia's local currency government bonds could extend their world-leading rally if President Hakainde Hichilema secures a decisive victory in the country's Aug. 13 presidential election, according to Citigroup, which said policy continuity would likely attract fresh foreign investment.

Kwacha-denominated government bonds have returned 36% in U.S. dollar terms so far this year, making them the best-performing emerging market local debt tracked by Bloomberg. By comparison, the Bloomberg Emerging Market Local Currency Government Index has gained just 1.35% over the same period. Despite the strong performance, some investors are holding back ahead of the election, waiting for greater political clarity before increasing exposure.

Citigroup strategist Katie Kironde said a clear election win for Hichilema would likely encourage offshore investors to participate in the government's next bond auction, helping push bond yields lower. Zambia's benchmark 10-year bond yield has already fallen about 70 basis points this year, while yields at the June government bond auction ranged from 14.25% on shorter maturities to 17.5% on longer-term securities.

Investor confidence has improved as Hichilema's administration pursues fiscal reforms, advances the restructuring of Zambia's external debt following its 2020 sovereign default, and benefits from stronger copper exports. Foreign participation in the bond market has also increased after authorities relaxed restrictions on non-resident investors earlier this year. The kwacha has strengthened about 20% against the U.S. dollar in 2026, following a gain of roughly 25% in 2025, further boosting returns for international investors.

Key Takeaways

Zambia has emerged as one of Africa's strongest investment stories as economic reforms, debt restructuring and a stronger currency have combined to deliver exceptional returns in local financial markets. The upcoming presidential election is now viewed as a critical test of whether that momentum can continue. Investors generally favor policy stability, particularly in frontier markets where political uncertainty can quickly trigger capital outflows and currency volatility. A decisive victory for Hichilema would likely reinforce confidence in the government's fiscal consolidation efforts and commitment to reforms agreed with international creditors, supporting continued foreign demand for Zambian bonds. Conversely, a closely contested election or uncertainty over future economic policy could prompt investors to delay new allocations until the political outlook becomes clearer. Beyond the election, Zambia's prospects remain closely tied to copper, its largest export, as stronger global demand for the metal would provide additional support for government revenues, foreign exchange earnings and macroeconomic stability. Together, these factors have positioned Zambia as one of the standout performers among emerging and frontier markets in 2026.

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