The British High Court has been asked to intervene in a macabre dispute over the mortal remains of Zambia’s late ex-president, Rupiah Banda. The case, which pits family members against the Zambian government, is a morbid distraction for investors already fretting over gilt yields and fiscal discipline in emerging markets.
For those of us who track capital flows, the spectacle reeks of political instability that typically sends hard currency fleeing for the exits. Barrister James O’Neill QC argued on Tuesday that the Zambian state’s refusal to release Banda’s body for burial is a violation of common law and the European Convention on Human Rights. The government counters that Banda died in exile and his corpse must be repatriated for a state funeral, a move the family claims is politically motivated.
The High Court, which has a history of mediating such ghoulish disputes from former colonies, will likely rule in favour of the family. But the deeper issue is sovereign risk. Zambia, already labouring under a mountain of dollar-denominated debt and inflation north of 9%, cannot afford a legitimacy crisis. The kwacha has lost nearly 30% against the greenback this year, and an IMF bailout is hanging by a thread.
One cannot help but draw parallels to the 2014 battle over the body of Ghana’s John Atta Mills, which also ended up in a London court. The legal fees alone could have reduced Zambia’s current account deficit. Meanwhile, Zambian Eurobonds have taken a hit, with yields on the 2027 note edging up 15 basis points this week. The market does not care who gets the corpse; it cares about the signal it sends.
Transparency International ranks Zambia 117th out of 180 nations on its corruption index, and this affair will do little to reassure foreign investors. The Bank of Zambia has already raised rates by 200 basis points this year to defend the currency, but capital flight continues apace. The irony is that Banda himself, a former vice-president, was a critic of imprudent borrowing during his tenure. Now his dead body is a liability that the government cannot bury.
If the High Court mandates release of the remains, expect a face-saving fudge: the family buries him in Lusaka, the government claims victory, and the markets move on. But if the dispute drags, watch for further depreciation of the kwacha and a spike in sovereign CDS spreads. The bottom line is that dead presidents don’t set interest rates, but their corpses can unsettle them.
