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 $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 a significant achievement 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,” said President Hichilema.
Adesina congratulated the government of Zambia for reaching an agreement with its bilateral creditors under the G20 Common Framework on debt treatment. The agreement puts Zambia back on the path for economic recovery and sustainable debt management.
“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,” Adesina told President Hichilema during the meeting on Tuesday at State House in the capital Lusaka.
The Bank chief outlined several measures including an initial up to $150 million in budget support for consideration for approval by its board of directors; and several other investment projects in key sectors of the economy, including agriculture, energy, and transport. He said 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.
Adesina said, “The starting point is to now make sure the debt treatment works and that Zambia does not again return to a debt crisis.” The Bank chief offered Zambia a raft of technical and advisory support from the Bank, including support for public financial management; public debt management; public investment management; strengthened procurement rules and systems, public-private partnerships, and domestic resource mobilization.
In addition to the planned $150 million in budget support, Adesina said the Bank will help Zambia to access another $168 million per year from the non-concessional window of the Bank.
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.
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. Adesina urged the government to optimize 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 of $1.02 billion.
The Bank chief also met with private sector leaders, including the chief executive officers of the financial industry in Zambia, and called on 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 raised the bar in terms of the Bank’s status and performance,” he said.
Adesina was accompanied by the Vice President for Regional Development, Integration and Business Delivery, Marie-Laure Akin Olugbade, the Vice President for Agriculture, Human and Social Development Dr Beth Dunford, the Director General for Southern Africa Leila Mokaddem, Director of Agriculture and Agro-Industry Martin Fregene, Director of Water and Sanitation Osward Chanda, and the Bank’s Country Manager for Zambia, Raubil Olaniyi Durowoju.
On his part, President Hichilema was accompanied by Minister for Science and Technology and acting Finance Minister Felix Mutati as well as Central Bank Governor Denny Kalyalya.
Adesina praised President Hichilema for his “drive, passion and resolute approach to debt resolution and restructuring for the country,” and added, “Zambia is back. Zambia is bankable; and you, Mr President, you are bankable. You can count on the African Development Bank’s support all the way.”