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The World Bank has approved US$275 million in assistance to Zambia to help the country recover from the effects of the Covid-19 pandemic and ill effects caused by the war in Ukraine. Zambia is in deep debt so much so, the southern African country had to go for a sovereign default; the first country to do so in Africa
The World Bank has approved US$275 million in assistance to Zambia to help the country recover from the effects of the Covid-19 pandemic and ill effects caused by the war in Ukraine. Zambia is in deep debt so much so, the southern African country had to go for a sovereign default; the first country to do so in Africa. One of the conditions imposed by the lender -the World Bank-is promotion of the private sector in the country to bail out the country from the recurring losses of the public sector.
The International Development Association (IDA), a subsidiary of the World Bank, will lend the money under a scheme meant for vulnerable countries through grants or credits at zero or very low interest. Zambia’s debt is estimated at US$17.3 billion – since the start of the Covid-19 pandemic. In 2020, Zambia became the first African country to default on its external debt, a fact that would make it the country difficult to contract other loans or attract foreign investments. This is in addition to the US$ 1.3 billion the country got from the IMF for undertaking economic restructuring in the country, with a heavy focus on privatization.
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The accession to the presidency of Hakainde Hichilema, an industrialist has improved Zambia’s relations with its creditors and international donors. The default was mostly due to heavy debt accumulated by his predecessor Edgar Lungu, who was criticized for taking out massive loans to finance a spate of infrastructure projects during his six-year presidency. The IMF is upbeat about the future growth prospects of Zambia, which is one of the world’s largest copper producers, a commodity that can offer good prices after the pandemic. According to the IMF, Zambia’s economy is expected to grow by 4.6% in 2021 after the 2.8% GDP contraction recorded in 2020.
