Zambia facing Chinese debt trap: Report

The country is leaving little for capital formation, especially funds required for infrastructure development.

While the country is struggling to carry out World bank suggested reforms measures, including restoring fiscal and long-term debt sustainability, increasing farmer productivity and access to agricultural markets, ensuring access to energy and access to finance and private sector development, it is facing a paucity of resources and it makes the country dependent on and vulnerable to external debt, reports Africa Daily.

In view of this, the Zambian government is actively seeking further infrastructure development through Public-private Partnership (PPP) projects.

Zambia, like other indebted and capital-deficient countries of Africa, desperately needs funds to develop its infrastructure to connect its mineral-rich areas to the big cities and ports.

China is emerging as a major force where its debt trap is creating hurdles in the path of the country's progress.

Recently, a consortium of Chinese companies has won a bid to finance the upgrading of a 327 km road linking the Zambian capital Lusaka to Ndola, in the country’s Copperbelt province.

The Consortium Macro Ocean Investment won the bid which consists of three Chinese companies, viz., AVIC International Project Engineering, Zhenjiang Communications Construction Group and China Railway Seventh Group.

The consortium won the USD 650 million deal to build the dual carriageway road under the public–private partnership (PPP) model.

The agreement signed by the Chinese companies last month gave them a 25-year concession period, split into three years for construction and 22 years of operation and maintenance rights.

The road awarded to the Macro Ocean Investment consortium links the Zambian capital to the mineral-rich Copperbelt province and the border with the Democratic Republic of Congo (DRC) and carries almost all the road-bound mineral exports from the region along the southern corridor towards Tanzania.

However, there is a murmur among the critics of the Zambian government for its dependence on China for building infrastructure.

The concern expressed by them pertains to the fact that China is the single biggest lender to Zambia and now as a country is facing an unsustainable debt burden, additional Chinese loans at almost commercial rates would further aggravate the problem.

Its loan accounted for more than USD 6 billion of the country’s total USD 16.8 billion as of December 2021.