Zambia: AfDB Commits up to $150 Million in Budget Support as Country Achieves Debt Restructuring Success

Dr. Akinwumi Adesina, president of the African Development Bank Group, has concluded a two-day official visit to Zambia, during which he met with President Hakainde Hichilema to discuss further support for the country as it emerges from a successful $6.3 billion debt restructuring for bilateral debtors, concluded with bilateral debtors under the G20 Common Framework on debt treatment.
President Hichilema noted that while his government had made significant progress in reducing the debt owed to official creditors, more work remains to reduce the debt owed to local and external commercial creditors, such as Eurobond holders. “We have lost a significant amount of time due to the ‘python of debt’. President Hichilema stated that the time has come to unleash growth and prosperity for his people.

Adesina congratulated the government of Zambia for concluding a debt settlement agreement with its bilateral creditors under the G20 Common Framework. The agreement returns Zambia to a path of economic recovery and sustainable debt management.

Adesina told President Hichilema during their meeting on Tuesday at State House in the Zambian capital Lusaka, “You have created a sense of hope in the country and confidence in the economy, paving the way for investments to return and accelerating the drive to achieve prosperity for the country.”

The Bank’s chief outlined a number of measures, including an initial budget support of up to $150 million for consideration by its board of directors; and a number of investment initiatives in key economic sectors, including agriculture, energy, and transportation. He stated that the Bank will promptly make available to Zambia the full services of the Africa Legal Support Facility (ALSF) to assist Zambia’s efforts to renegotiate debt terms with private external creditors. The ALSF, which was established in 2008, has assisted several countries with creditor engagement and debt restructuring and relief negotiations.

Adesina stated, “The first step is to ensure that the debt treatment is effective and that Zambia does not return to a debt crisis.” The Bank’s chief offered Zambia an array of advisory and technical assistance, including assistance with public financial management, public debt management, public investment management, strengthened procurement rules and systems, public-private partnerships, and domestic resource mobilisation.

Adesina stated that in addition to the anticipated $150 million in budget support, the Bank will assist Zambia in gaining access to an additional $168 million per year through its non-concessional window.
The Bank will also assist Zambia in gaining access to the regional financing portal of the African Development Fund (ADF) in order to finance large-scale transformative infrastructure, such as energy, road and rail transport connections with Mozambique, Angola, and the Democratic Republic of the Congo.

The Bank will assist in reforming Zambia’s farm input support programme so that it is more efficient, transparent, and administered by the private sector, utilising biometric registration of farmers and electronic vouchers to deliver support directly to farmers.

In addition, the Bank will support the establishment of Special Agro-Industrial Processing Zones and a Youth Entrepreneurship Investment Bank in order to construct new financial ecosystems around the businesses of young people and generate employment. Adesina urged the government to optimise its infrastructure-related debt by contemplating ‘asset recycling,’ which would entail selling its assets to the private sector in order to free up funds for investment in new infrastructure projects.

The African Development Bank is currently funding 25 initiatives for a total of $1.02 billion.

The head of the Bank also met with private sector leaders, including the CEOs of Zambia’s financial industry, and urged them to take advantage of these opportunities to invest more in the country.

President Hichilema thanked Adesina for his “tremendous work for the African Development Bank and Africa.” Your leadership has elevated the status and performance of the Bank,” he said.

Adesina was accompanied by Vice President for Regional Development, Integration and Business Delivery Marie-Laure Akin Olugbade, Vice President for Agriculture, Human and Social Development Dr. Beth Dunford, Director General for Southern Africa Leila Mokaddem, Director of Agriculture and Agro-Industry Martin Fregene, Director of Water and Sanitation Osward Chanda, and Country Manager for Zambia Raubil Olaniyan Durowoju.

President Hichilema was accompanied by the Minister of Science and Technology and interim Minister of Finance, Felix Mutati, and the Governor of the Central Bank, Denny Kalyema.

Adesina lauded President Hichilema’s “determination, passion, and resolute approach to debt resolution and restructuring for the country,” and added, “Zambia is back. Zambia is bankable, and you, sir, are bankable as well. You can rely on the full support of the African Development Bank.”