DEBT RESTRUCTURING EXPLAINED IN SIMPLE LANGUAGE
Our country was literally driven into a ditch and half of the borrowed funds ended up into the pockets of looters. By 2021, the economy had zero capacity to repay its debts. The new government faced a huge challenge. This is not fictitious, it’s real. If the same rebranded parties continued, this country could have been worse than the DRC.
Many people hear the words “debt restructuring” and immediately assume it means debt has been cancelled. That is not what debt restructuring means. Debt restructuring means changing the repayment terms of a debt when the original repayment schedule has become impossible.
Imagine a farmer who borrowed K100,000. The agreement was that he would repay the entire amount within one year, but then drought strikes. The harvest fails. Income collapses.
The farmer now faces a difficult choice; either attempt to pay the entire K100,000 immediately and destroy his business, or negotiate new repayment terms. The bank agrees to restructure the debt. Instead of repaying K100,000 in one year, the farmer is allowed to repay it over five years.
Instead of finding K100,000 immediately, he now pays about K20,000 per year. This leaves approximately K80,000 each year available for seed, fertilizer, irrigation equipment, livestock, and expansion of the farm. As production grows, the farmer earns more income. The farm recovers. Jobs are protected. The farmer eventually repays the debt while continuing to build wealth.
That is the purpose of restructuring. It is not about running away from debt. It is about creating breathing space to recover, grow and regain the capacity to pay. This is exactly what Zambia faced.
By 2020, Zambia had defaulted on its external debt obligations. The same practitioners of kaponyamonics who are now presenting themselves as “saviours” drove our beautiful country into this mess.
The country could not sustainably meet all its repayment commitments while simultaneously funding schools, hospitals, roads, social services and economic growth.
Debt restructuring provided breathing space. It reduced immediate repayment pressure and allowed government resources to be directed toward rebuilding the economy, recruiting teachers and health workers, supporting farmers, stabilising energy supply and restoring investor confidence.
We are in the right direction. Grow the economy first. Strengthen the country’s ability to generate income. Then honour debt obligations from a position of strength rather than weakness. This is why Zambia’s successful debt restructuring under the G20 Common Framework was such an important milestone.
Just as a struggling farmer needs time to recover before he can fully repay a loan, nations sometimes need breathing space to rebuild before they can sustainably meet their obligations.
Debt restructuring is not the end of a journey. It is the bridge between financial distress and economic recovery before full scale household recovery.
Saviour Chishimba
United Progressive People (UPP)
UPND Alliance Partner