- The African Development Bank offers an initial $150M to Zambia for budgetary support.
- Fresh from striking a debt restructuring agreement with creditors, Zambia will also get an additional $168M per year from AfDB’s non-concessional window.
- AfDB President Dr. Akinwumi Adesina says the lender will aid Zambia in her economic recovery efforts.
Fresh from a successful $6.3 billion debt restructuring deal with bilateral creditors, the African Development Bank (AfDB) is rolling out $150 million support line for Zambia to accelerate the country’s recovery efforts.
In June this year, the International Monetary Fund (IMF) lauded the debt treatment agreement struck by Zambia and its official creditors under the G20 Common Framework.
During a meeting with AfDB, Zambia President Hakainde Hichilema acknowledged the significant progress made on official creditor debt. Hichilema, however, highlighted the need to address debt owed to local and external commercial creditors, including Eurobond holders. He expressed the desire to break free from the burden of debt and pave the way for growth and prosperity for Zambia.
AfDB President Dr. Akinwumi Adesina lauded Zambia for reaching an agreement with creditors. The move will reinstate the country on the path to economic recovery and sustainable debt management, he noted.
“You have created a sense of hope in the country and confidence in the economy, paving the way for investments to return and accelerate the drive to achieve prosperity for the country,” explained Dr. Adesina.
Measures to support Zambia’s recovery
The AfDB is aiding Zambia’s economic recovery and development. Dr. Adesina outlined several measures, including an initial up to $150 million in budget support, pending approval by the Group’s board. Additionally, the bank plans to invest in Zambia’s key sectors such as agriculture, energy, and transport.
To bolster Zambia’s efforts in renegotiating debt terms with private external creditors, AfDB will make available the full services of the Africa Legal Support Facility. Established in 2008, ALSF has previously assisted countries in creditor negotiations on debt restructuring and relief.
The bank’s support will extend beyond financial assistance, with Dr. Adesina offering technical and advisory support Zambia. This includes assistance in public financial management, public debt management, and public investment management. AfDB help will also go to strengthening procurement rules and systems, public-private partnerships, and domestic resource mobilization.
Expanding financing opportunities
In addition to the planned $150 million in budget support, AfDB is exploring avenues to help Zambia access an additional $168 million per year from the non-concessional window of the bank. Moreover, the bank will support Zambia in accessing the regional financing window of the ADF to finance transformative infrastructure projects, including cross-border energy, road, and rail transport links.
The Bank’s commitment also extends to agricultural development. It will provide support to reform Zambia’s farm input support program, aiming for greater efficiency, transparency, and private sector involvement. Biometric registration of farmers and the use of electronic vouchers will streamline the delivery of support to farmers.
To promote sustainable growth, AfDB will assist in establishing Special Agro-Industrial Processing Zones and a Youth Entrepreneurship Investment Bank. These initiatives will create new financial ecosystems for the youth, generating much-needed jobs.
However, Dr. Adesina urged the government to consider “asset recycling” as a strategy to optimize infrastructure investments. This approach involves selling assets to the private sector to free up liquidity for reinvestment in new infrastructure projects.
Strong partnership with the private sector
In addition to discussions with President Hichilema, the Bank chief also engaged with private sector leaders. He encouraged them to seize the opportunities offered by AfDB’s support to enhance investments in Zambia.
President Hichilema thanked Dr. Adesina for his work in uplifting Africa through AfDB projects. He commended the lender’s leadership, which has significantly elevated its status and performance.
During the visit, Dr. Adesina was accompanied by the bank’s top leadership, including Vice Presidents and Directors for regional development, agriculture, water, and sanitation.
On his part, Zambia President was accompanied by Minister for Science and Technology and acting Finance Minister Felix Mutati, as well as Central Bank Governor Denny Kalyalya.
Dr. Adesina commented Hichilema for his determination and resolute approach to debt resolution and restructuring, expressing confidence in Zambia’s future. He assured him of the AfDB’s unwavering support throughout the country’s economic recovery and growth.
The visit also reaffirmed the strong partnership between Zambia and the AfDB. It marks a significant step forward in Zambia’s quest for economic prosperity and sustainable development.
