ActionAid Zambia has urged government to re-engage bondholders and seek sustainable solutions to the country’s debt problem.
Country Director, Nalucha Ziba said the organization is concerned with the latest developments on worsening credit ratings with dwindling prospects to attract future financing and penalties arising from the default.
Ms. Ziba noted that Fitch ratings, a credit rating agency already downgraded Zambia to almost junk status after government sought to delay interest payments to bondholders in September 2020, therefore the need for the country to attract sustainable foreign investment which responds to its economic needs.
She stated that the poor credit rating will affect investor confidence and eventually lead to capital flight, which may further weaken the economy by the possible contraction of Gross Domestic Product (GDP) and currency depreciation.
Ms. Ziba said it is the organization’s hope that bondholders reconsider the status quo and demonstrate a measure of humanity and recognize the suffering that its actions will inflict on millions of Zambian women and children who are already living in poverty.
“We would therefore like to urge government to re-engage bondholders regarding the six months interest payment relief. Our hope is that bondholders reconsider the status quo and demonstrate a measure of humanity and recognize the suffering that its actions will inflict on millions of Zambian women and children who are already living in poverty. The vulnerable Zambians are the big losers in this case, as government will further be handcuffed in providing any gender responsive public services due to the rejection by bondholders to grant Zambia a debt interest payment relief,” Ms. Nalucha stated.
She added that it was the organization’s considered view that the debt relief will be necessary to ensure that the most vulnerable Zambians do not suffer the consequences of the country’s debt mismanagement amidst Covid-19.
And Ms. Ziba advised Chinese lending institutions, whether state-run or quasi-commercial, to clearly state how much they have lent to Zambia and the loan terms and conditions involved.
“The Zambian government should also be more transparent on its borrowings and finances and provide a clear strategy on public debt management which is key in assuring lenders our commitment towards debt sustainability. More importantly we would like to remind the government that in as much as seeking debt interest payment relief seems to be the only way to go for Zambia. It is however, suffice to note that this is not enough,” she said.

On Friday 13th November2020, Bondholders rejected Zambia’s request for debt relief, setting the country on course to becoming Africa’s first sovereign default since the onset of the coronavirus pandemic.

Holders of Zambia’s US$3 billion of Eurobonds voted against a proposal to suspend interest payments for six months.