Zambia, Africa’s second-largest copper producer, is saddled with debt worth billions, and its new President has a plan to excavate himself out: stop borrowing so much and mine harder.
Hakainde Hichilema was elected President last month, following five failed presidential bids and a 2017 stint in prison for “treason” when the businessman refused to yield to now-former President Edgar Lungu’s convoy.
The new President was asked to determine the country’s debt burden when he took office. Zambia became the first African country to default during the pandemic last year, with its GDP shrinking by nearly 5% by 2020. This was partly due to recent low commodities prices, which made debt servicing more difficult. Still, it was also due to Zambia’s high borrowing levels under China’s Belt and Road infrastructure initiative. Zambia’s debt is officially $12.7 billion, with exports accounting for around 30% of its external debt, but Hichilema and others believe it is much higher.
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Climbing out from under that pile will necessarily require restructuring, which will require open-mindedness about the scope of the problem and perhaps some goodwill: Lenders are expected to agree to widespread haircuts, according to analysts. The effort, however, would be significantly aided by Hichilema’s liberal party, the United Party for National Development, promising “accelerated economic recovery.”
Hichilema stated, “Harnessing the excellent options in the mining sector would’ve been crucial to our economic recovery.” “We will enhance copper and other mineral production while also leveraging the advantages of various minerals such as gold, cobalt, and manganese, among others. We will also stimulate further exploration and value addition.”
