Zambia Roundup: Edgar Lungu election ban, debt restructuring, green bond
Zambia joins OECD
Zambia has officially joined the Organisation for Economic Co-operation and Development (OECD) as its 56th member. This entry not only positions Zambia as the 12th African nation within this organisation but also opens avenues for better policy design and enhanced economic growth driven by necessary reforms. The announcement was made by Tourism Minister Rodney Sikumba during a high-level meeting in Paris, highlighting the potential for collaborative economic strategies that the membership entails.
Bilateral debt restructuring agreement with France
Zambia has entered into a bilateral debt restructuring agreement with France, crucial for managing its estimated $13 billion external debt, which had escalated following a default in 2020. Zambian Finance Minister Situmbeko Musokotwane heralded this accord as a landmark achievement, representing the first arrangement under the G20’s Common Framework for debt restructuring. The deal is poised to extend the maturity of Zambia’s debt by an average of 12 years, alongside stipulating interest rates of 1% for the next 14 years, subsequently increasing to a maximum of 2.5%.
$80 million erroneous payment to China
Zambia is actively managing an $80 million erroneous payment made by its power utility, Zesco Ltd., to China as it finalises its debt restructuring agreements. This payment arose from revenues linked to a securitised account for a power plant funded by Chinese enterprises. According to Treasury Secretary Felix Nkulukusa, there is a proposal to treat this payment as an advance against interest on Zambia’s debt obligations to China. While Zambia has initiated a memorandum of understanding with its official creditor committee, it has yet to finalise agreements, which has hindered the resumption of payments.
$97 million green bond
Zambia’s Copperbelt Energy Corp. (CEC) has launched a $97 million green bond aimed at furthering the Itimpi Solar Project's expansion. This initiative will bolster the project’s capacity by an additional 136 megawatts, reaching a total capacity of 250 megawatts by next year. The bond, facilitated by Stanbic Bank Zambia, is a segment of a larger $200 million green bond initiative with significant backing from investors such as ZCCM Investments Holdings and the Dutch development bank FMO. CEC plays a pivotal role in supplying power to Zambian copper mines and also exports electricity to the neighbouring Democratic Republic of Congo.
Court rules former President Lungu ineligible to contest in 2026 elections
Zambia’s Constitutional Court has ruled that former President Edgar Lungu is ineligible to contest in the 2026 elections, following a determination that he has exhausted the permissible two-term limit. The court clarified that his presidency, which commenced in 2015 upon the passing of President Michael Sata, constituted a full term, in addition to his elected term from 2016 to 2021. Lungu's announcement of a potential political comeback and his intention to challenge the incumbent President Hakainde Hichilema had drawn considerable attention, making this ruling a noteworthy event in Zambia's political landscape.
