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Bank backs Zambia in new drive to unlock growth

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Zambian President Hakainde Hichilema says that although his government has made significant progress on official creditor debt, more work needs to be done to tackle debt owed to local and external commercial creditors including Eurobond holders. Image credit: Wikimedia Commons

Bank backs Zambia in new drive to unlock growth

The African Development Bank Group has rallied behind Zambia’s recent debt restructuring deal and plans to inject more than USD150-million into the Zambian economy to spur growth.   

African Development Bank Group President Dr Akinwumi Adesina has completed a two-day official visit to Zambia where he met with President Hakainde Hichilema to discuss further support for the country as it emerges from a successful USD6.3-billion debt restructuring for bilateral debtors, concluded with bilateral debtors under the G20 Common Framework on debt treatment.

Hichilema says that although his government has made significant progress on official creditor debt, more work needs to be done to tackle debt owed to local and external commercial creditors including Eurobond holders.

“We have lost a lot of time under the ‘python of debt’. We want to now unlock growth and prosperity for our people,” says Hichilema.

The agreement with Zambia’s bilateral creditors under the G20 Common Framework puts the country back on the path for economic recovery and sustainable debt management.

“President Hichilema has 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,” says Adesina.

Bank invests in Zambian economy (Bank backs Zambia in new drive to unlock growth)

During a meeting with Hichilema, Adesina outlined several measures including an initial USD150-million in budget support for consideration for approval by its board of directors.

In addition, Adesina announced several other investment projects in key sectors of the economy, including agriculture, energy, and transport.

According to Adesina, the Bank will immediately make available to Zambia the full services of the Africa Legal Support Facility (ALSF) to support Zambia efforts to renegotiate the terms and conditions of debt with private external creditors. The ALSF, established in 2008, has assisted several countries in creditor engagement and negotiations related to debt restructuring and relief.

“The starting point is to now make sure the debt treatment works, and that Zambia does not again return to a debt crisis,” says Adesina.

He offered Zambia a raft of technical and advisory support including support for public financial management; public debt management; public investment management; strengthened procurement rules and systems, public-private partnerships, and domestic resource mobilisation.

In addition to the planned USD150-million in budget support, the Bank will help Zambia to access another USD168-million per year from the non-concessional window of the Bank.

Importantly, the Bank will also support Zambia to access regional financing window of the ADF to finance large transformative infrastructure, including energy, road and rail transport connections with Mozambique, Angola, and the Democratic Republic of Congo (DRC).

Supporting a range of programs (Bank backs Zambia in new drive to unlock growth)

Adesina says that the Bank will provide support to reform Zambia’s farm input support program to be more efficient, transparent, and delivered by the private sector, using biometric registration of farmers and use of electronic vouchers to deliver support directly to farmers.

“The Bank will also provide support for the establishment of Special Agro-Industrial Processing Zones and a Youth Entrepreneurship Investment Bank to build new financial ecosystems around the businesses of the youth and create jobs,” says Adesina.

He urged the government to optimise on its debt used for infrastructure by considering ‘asset recycling’ which would involve selling its assets to the private sector to free up liquidity for investment in new infrastructure projects.

The African Development Bank currently has 25 active projects with total financing ofUSD1.02-billion.

Meeting with the private sector (Bank backs Zambia in new drive to unlock growth)

Adesina also met with private sector leaders, including the CEOs of the financial industry in Zambia, and called on them to take advantage of these opportunities to invest more in the country.

“Zambia is back. Zambia is bankable and President Hichilema is bankable. Zambia can count on the African Development Bank’s support all the way,” Adesina concludes.

Bank backs Zambia in new drive to unlock growth

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Bank backs Zambia in new drive to unlock growth

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