Zambia ruling party picks Banda to run for president

LUSAKA (Reuters) - Zambia's ruling MMD party chose the country's vice president, Rupiah Banda, on Friday as its candidate to fight a November election to replace the late President Levy Mwanawasa, a party official said.

Banda beat off a challenge from Finance Minister Ng'andu Magande and 14 other candidates to represent the governing party in the race to succeed Mwanawasa, who died last month after a stroke.

Zambia, which became one of Africa's rare success stories under Mwanawasa, faces economic and political uncertainty as the contest to replace him intensifies.

Banda, 72, told officials of the MMD (Movement for Multiparty Democracy) that he would continue with Mwanawasa's policies if elected as the country's new president.

"I want to work with all my comrades in order to unite the party and the country and keep on with our policies," he said.

That's what foreign investors want to hear.

"For investors who note the macroeconomic stabilization, improvement in external debt and GDP growth achieved in Zambia in recent years, it is policy continuity that is likely to matter most, said Razia Khan, Regional Head of Research for Africa, at Standard Chartered bank. "And it is on this point that they will seek reassurance."

Banda drew 43 votes and Magande 11. Only seven of 19 candidates contested the final vote after the others withdrew, MMD elections official Jeff Kande said.

DIPLOMATIC EXPERIENCE

Banda, who was appointed as Mwanawasa's deputy in 2006, took over as head of the government after the president died last month. He has served as representative to the United Nations and was foreign minister in the 1970s in the administration of Zambia's first post-independence leader, Kenneth Kaunda. After that he served as a parliamentarian between 1978 and 1988.

Finance Minister Magande said he supported Banda for president. "I accept the defeat because this is democracy. ... I will campaign for him in my constituency," Magande told Reuters.

The divisions within the ruling party could benefit main opposition leader Michael Sata, who narrowly lost to Mwanawasa in a 2006 election -- particularly if infighting gets worse.

The MMD candidate will face a challenge from Sata and Hakainde Hichilema, leader of the United Party for National Development, the third largest party in parliament.

Investors hope Zambia's new leadership will stick to Mwanawasa's fiscal discipline, which won him praise from Western donors and billions of dollars in debt relief.

But some of the shine is also coming off Zambia's economic performance. The kwacha currency has lost about 3 percent of its value against the dollar since Mwanawasa's death, mostly due to political uncertainty but also the dollar's overall strength.

(Writing by Marius Bosch; Editing by Michael Georgy and Mark Trevelyan)