DEBT RESTRUCTURING: Zambia-China trade, investment and debt!

By Alexander Nkosi


According to the Chinese Embassy in South Africa, China has remained Africa’s largest trading partner for 12 consecutive years. According to the latest data released by the General Administration of Customs of China, the total bilateral trade between China and Africa in 2021 reached USD 254.3 billion, up 35.3 percent year on year, among which, Africa exported USD 105.9 billion of goods to China, up 43.7 percent year on year. While this is good, the downside of it is that Africa largely exports raw materials to China while China largely exports manufactured goods to Africa.

Since 2000, China-Africa cooperation has increased significantly. In 2019, China’s stock of direct investment in Africa reached USD 49.1 billion, an increase of nearly 100 times since 2000. CABC chairman Wang Licheng said total Chinese direct investment in Africa probably surpassed US$56 billion by the end of 2020, because some firms did not register their investment with the ministry, and reinvestment was not included.

Africa’s Chinese debt has also grown significantly. According to the Economic Times, Chinese debt to Africa exceeds USD140 billion.


Since Independence, Zambia has maintained very strong ties with China. Bilateral trade volume between China and Zambia stood at USD 5.07 billion in 2018. Zambia has a trade surplus with China which has seen the figure grow significantly from USD 1.25 billion in 2015 to USD 3.13 billion in 2018. Like the case with other African countries, Zambia mostly exports raw materials to China. By the end of 2018, China’s direct investment stock in Zambia accumulated to over USD 3.6 billion. Zambia’s debt to China has also significantly increased over the years and is well above USD 3 billion.

As we step up copper production, it would also be important to note that China remains one of the largest importers of copper. In 2020 the top importers of Copper ore were China (USD33.9 billion), Japan (USD8.51 billion), South Korea (USD4.22 billion), Germany (USD2.03 billion), and Spain (USD1.8 billion).


In 2018, the Chinese Ambassador met former President Edgar Lungu, during that meeting he expressed the need to actively engage the Chinese government and creditors in the process of debt restructuring. President Lungu promised to constitute a team of ministers and send them to China to discuss debt restructuring.

The new dawn government has reiterated its commitment to strengthening Zambia-China relations. President Hichilema met the Chinese Ambassador to Zambia and discussed- bilateral tade, investments and debt.

IMF conducted a debt sustainability assessment which is key in debt restructuring negotiations. With IMF support, it is much easier to engage creditors aligned to the West, key among them, are the eurobond creditors where negotiations are complex due to the huge number of investers in eurobonds involved. Creditors aligned to the West are more into ensuring we have a clear debt management roadmap so that we don’t slip back into the habit of excessive borrowing and fail to repay them after restructuring our debt. This is where being on an IMF program is key.

The Chinese on the other hand are more into safeguarding their interests in Zambia; ensuring that their running contracts and investments are not in jeopardy. To speed up the process, it would be very important for President Hichilema to travel to China to meet the Chinese President, government and creditors and thrash out debt restructuring. From indications made by the Chinese Ambassador to Zambia, they are keen on helping Zambia overcome the debt burden and further cement Zambia-China relations.


In conclusion, Zambia needs its debt restructured to reduce pressure on the kwacha arising from high external debt service outlays (paid in dollars). Debt restructuring also frees up resources for investment in supporting local solutions. It also helps us cut down on borrowing as funds are released from debt service.

Apart from debt restructuring, the IMF deal will also help us attract capital inflow and access to concessional borrowing. On China, this is an opportunity to redefine and strengthen our engagement, set investment and trade priorities.

Over the years, we have successfully managed to work closely with the West and the East and this can only get better. However, the future should be that of Zambia reducing its dependency on borrowing to finance development. We had this opportunity in 2011 but current high debt levels require that we restructure to give us breathing space to implement local solutions.


Please enter your comment!
Please enter your name here