Wednesday, July 17, 2024

Zambia Debt Relief Talks miss 5th MOU Deadline


  • How Ghana got Official Creditors’ nod faster than Zambia
  • Why is China delaying signing the Memorandum of Understanding?

By Mwansa Chalwe Snr

When Zambia’s Official Creditor Committee (OCC) met in Washington on 18th April, 2023, it was reported that barriers holding talks back had been resolved. And the non-binding Memorandum of Understanding (MOU) was going to be signed in May, when the OCC was scheduled to meet again.

“Agreement was reached on nearly all issues that were holding back progress. There was progress and the next meeting is in two or three weeks’ time and MOU is expected to be signed,” Reuters reported, quoting two different sources who were privy to what transpired in the OCC meetings.

Although there was general optimism about the Official Creditors signing the MOU in May, there were those of us who understand how China operates in negotiations, who were very cautious and rather skeptical. As Patriots, we advised the Zambian government to take a risk mitigation measure. We suggested that a powerful delegation led by the Finance Minister, accompanied by the foreign Minister, go on a diplomatic mission, to lobby China before the OCC meeting in May. The physical trip by a high powered delegation to Beijing was going to be a deal clincher. The advice was ignored.

The May OCC meeting did take place, but no MOU was signed, and this is the fifth deadline that has been missed. China has clearly been sending a message to Zambia. As at present, Zambia’s Debt restructuring deal does not seem to have any end in sight. And Minister of Finance, Dr. Situmbeko Musokotwane, appears concerned after seeing the month of May pass without a deal.

Delays to the debt restructuring are having a significant impact on the economy and the livelihoods of our people. The uncertainty created by the protracted restructuring process has put pressure on our currency and made it difficult to attract the much needed foreign investment,” He said in statement addressed to Zambia’s Official Creditors Committee on 30 May, 2023.

In the past, there were various speculations as to the reasons why talks for the Zambian debt deal were stalling. However, following the speed at which Ghana has achieved financial assurances and approvals from the Official Creditors including China, it has made government critics question the Zambian government’s debt restructuring strategy. It has taken Ghana only two months, to get approvals from Official Creditors and the IMF Board after listening to advice from experts outside government and adopting their recommended strategy.

How Ghana got faster nod from Official Creditors than Zambia

Ghana secured a staff-level agreement with the International Monetary Fund (IMF) in December, 2022 for a $3 billion loan. And for the IMF’s board to sign off the programme, they required Ghana’s Official Creditors to provide financing assurances. China is Ghana’s biggest bilateral creditor, with about $1.7 billion of debt.

China had initially rejected attempts by Ghanaian officials for them to commit to the setting up of a Creditors’ Committee for an agreement on a debt package. In early February 2023, Ghanaian President Nana Addo Dankwa Akufo-Addo appealed to Germany to “encourage” China to support Ghana’s debt restructuring efforts when he met the visiting German Finance Minister, Christian Lindner.

“The President and the Finance Minister have appealed to Germany to support Ghana in convincing China to come to the table, and we are ready to do that but at the same time, I want to appeal to all Ghanaians who have strong ties to China, who are doing nice business with China to also engage them and convince them that it is time to sit down with all the creditors and agree on a package,” German Ambassador, Daniel Krull, advised Ghana. “We are prepared to live up to our responsibility as one of the major bilateral creditors to Ghana. The Big elephant in the room is China, the largest creditor to Ghana”.

On the basis of advice from Ghanians experts outside Government and the German Ambassador, on 22 March, 2023, Finance Minister Ken Ofori-Atta led a powerful delegation to Beijing. He disclosed that the Ghanian government’s top priority was to secure IMF board approval first, with the fine details of debt treatment operations to follow later. On his return, he reported that China had agreed to support Ghana and that they will cooperate in meetings with Paris Club and other bi-laterals. And one and half months later, on 12 May, 2023 – Official Creditors (Paris Club and China) gave financial assurance to IMF on behalf of China.

On 17 May, 2023 IMF Board approved Ghana’s loan and two days later on the 19 May, 2023 IMF remitted $600m to Bank of Ghana. It took Ghana less than two months to get Chinese support and IMF approval of the deal.

The reason why Ghana got the approvals fast was simple. They listened to Ghanian experts outside government and adopted a step by step strategy, and focused on lobbying the biggest creditor directly. Ghana undertook a high level physical visit to Beijing, knowing that members of the Paris Club were already in their column with the IMF having approved a staff level agreement. Ghana totally disregarded lobbying the United States government, the International Monetary Fund, World Bank, the United Nations Secretary General, and other Western countries to speak to China on their behalf after being advised by the German Ambassador.

Zambia on the other hand, despite the unsolicited advice to government to follow a similar approach as Ghana, decided to adopt a different strategy. Zambia has put undue faith in the effectiveness of the OCC by over relying on it. The country has not paid enough attention to the important arbiter for the debt deal, and one with a de facto veto – China. Zambia’s approach has showed a lack of understanding of the basics of Chinese civilization, culture and negotiations etiquette. Consequently, this has resulted in China changing goal posts and being reluctant to sign the MoU on five different expected occasions. There are five different dates on which the deal was expected to be consummated. And these are as follows: December 31, 2022; during the G20 Finance Ministers in February, 2023 in India; the end of 2023 first Quarter – 31 March, 2023; the April 2023’s IMF/World Bank Spring meetings in Washington and the latest being May, 2023 during the latest Official Creditor Committee meeting. In a normal situation, whoever has been advising Zambia on this failed Debt restructuring approach and strategy is supposed to be fired? It is proving a costly strategy.

On the February 1, 2023, I penned an article, advising government on how to speed up the debt deal. READ MORE:

Why is China not signing Zambia’s MOU?

It is no longer a secret that it is China who is delaying the deal, and there is no need to beat about the bush. The latest approval of Ghana’s deal by the Official Creditors who include China, is the clearest sign that Zambia has issues to resolve with China, before it can sign the MOU. In January,2023, both US Treasury Secretary Janet Yellen and former World Bank President, David Malpass accused China of delaying Zambia’s restructuring, and asked them to stop making unfeasible demands.

China is asking lots of questions in the Creditors’ Committees, and that causes delays, that strings out the process,” He said in an interview with Bloomberg News. “It’s important for them to be focused on getting to an actual debt restructuring where the burden can be lightened for Zambia.”

On the basis of the messages of support for Zambia’s Debt restructuring that was coming from Beijing, many Zambian analysts treated the Americans accusations of China with a pinch of salt. This is no longer the case. The Beijing messages of support have increasingly turned out to be mere rhetoric and diplomatic niceties, as actions speak louder than word.

Zambia, on the other hand, has not properly diagnosed the reasons why China is not signing the MOU. And as a result, they have been applying the wrong medicine, like the latest statement from the Finance Minister appealing to the OCC. It is this lack of proper diagnosis of why China is not signing the MOU that has resulted in the five missed deadlines, and the consequential delays in the deal. The restructuring deal has technical, diplomatic, relationships and geopolitical dimensions, which all have to be taken care of in strategy formulation and implementation. Zambia has placed too much focus on fulfilling technical issues only. This wrong diagnosis was clearly captured in Finance Minister Dr. Situmbeko Musokotwane’s answer News Diggers newspaper as to why government had missed the first quarter deadline for the deal.

We mentioned the first quarter because we are committed to delivering our part of the bargain. We did not take into account that these other people who also made commitments, they will not honour their side of commitment. And on our side as government, we have done everything that we committed ourselves with them but the delay is on their side. They are now asking questions here and there and we are pushing hard. The IMF is helping us, the World Bank is helping us, the donors are helping us,” he said.

In April, 2022, Chinese Ambassador to Zambia Du Xiaohui said that China did not want to join the G20 Creditors Committee because it believes that friendly bilateral cooperation is the best way to deal with debt between friends. It follows that China treats the OCC with some element of contempt, partly because it is a creation of the West. China is a reluctant participant of the Creditors Committee. It views the OCC as a formal administrative convenience for its borrowers to access IMF funding, among other things, but does not take it as serious negotiating forum for its debt, at least. And one will only get quicker results by direct informal engagement with China, and the OCC being there for rubber stamping.

And purely on the basis of my in depth analysis and my expertise, having written a book on the subject two years ago, and predicted what is currently playing out, there are about four possible, non-technical reasons why China is delaying signing the MOU. I am sure the government is aware of some of them. Unfortunately, some of the reasons are not for public consumption due to their sensitivity. Zambia will need to address these issues at some point. The earlier they are attended to, the better for our economy. The answer to the resolution of the debt deal at its current stage, lies more on what steps Zambia takes in engaging its biggest bilateral creditor, and not necessarily with appeals to the Official Creditor Committee, which is quite toothless without Chinese support.


The New Dawn administration must be shocked and disappointed about how the debt restructuring talks have turned out to be. They did not anticipate that the talks will take this long, resulting in the reversal of some of the macroeconomic gains they had scored. This, however, should be part of their learning curve. They should not be beating themselves up. They are a number of lessons that they can draw from this experience. The wise learn from their own mistakes and those of others.

The administration should realize that running a country involves team work. We are “Team Zambia” and we want to win. The patriots among us, want the New Dawn government, like any other government of the day, to succeed. When “Team Zambia” succeeds, credit will go to the manager, who is the President even if advice came from other people outside government. And players in a game rarely see their own mistakes. It is the outsiders who do and point them out so that corrections are made.

One of the first lessons from the stalled debt restructuring deal is the exposure of the limitations of the USA and Bretton Woods institutions like the IMF and World Bank influence in 21st Century development finance ecosystem. The West has failed to deliver debt relief to Zambia without China. There is no doubt that Zambia over relied on the West to deliver the deal, based on the country’s experience of the Highly Indebted Poor Countries (HIPC) program of the 2000s but situation has drastically changed.

Another major lesson for the New Dawn, is for them to open up to advice from different sections of society, because running a country is complex, with many uncontrollable variables and too many moving parts. There no one individual or group of individuals who can know everything, as the Senior Citizen Mr. Emmanuel Hachipuka, an experienced Chartered Accountant, correctly observed in his Op-ED to counsel President Hichilema.

It is not only HH that can decide the country’s direction alone. Whatever he does, he must remember that the country is not his alone but the majority shall decide the country’s direction. HH must learn to listen to the country. The country has a say in the way he governs his people.” He commented about the management of the economy and the country. “Public opinion matters, and so does the church and many segments of our society. He should desist from surrounding himself with “Yes bwanas”. Time is running out. The approach to debt restructuring he has used is causing severe delays. I am not sure who his consultants are on this subject.”


Mwansa Chalwe Snr is a Chartered accountant and Author. He is an independent financial commentator and analyst. He is the author of: Competition/dp/9982913174 Contact:[email protected]


  1. DRC president Tsisekedi has gone to China and negotiated a rise for his country’s shares in Chinese owned mines.

    • Your friend @Kaps a faithful UPND thinks going to China is imperialism. How many times have we gone to Europe? We even went for the coronation of the Commonwealth leader. Imperialism. What @Kaps forgets is that he is just a small man with wrong advice.

  2. I’ve said it before and I repeat Mwansa Chalwe Snr gives us hope as Zambians that with this type of intellect there is hope for the nation.

    He is spot on correct, the right approach has always been to engage the Chinese creditors through the Chinese govt. The Chinese govt made that clear months ago and I equally recall that pronouncement where they emphasized their preference to renegotiate a bail out for Zambia on a bilateral basis. Now look what is happening, these western nations and the IMF have put Zambia in a situation where we are trapped and confidence in the economy is again eroding.

    • Ctn…
      The USD is at K19.5 and rising each day again. Govt securities and fixed deposits are at the lowest because no one wants to risk banking their Kwacha away only to get it back when the USD is at K22 or K25. Let us have closure to this unfortunate episode we are in, we are Team Zambia as Mr Chalwe rightly puts it, yes the debt came about from the carelessness of the PF Govt and would they have handled it better who knows, we are where we are and must be pragmatic by making that trip to China and also avoid mistreating Chinese investors in the country because that too can have consequences related to the same.

  3. Our method of sidelining “our all weather friend” is where we missed it. My Bemba friend said: “Ubucushi bwa nkoko pungwa ta sakamana”.
    A sick person must seek the doctor, not vice versa. Gentlemen, pack your bags and fly to China. While Paris Club is doing their best for us, let us do our most part for ourselves.

  4. New Dawn must swallow its pride, and get Government to send Lungu to China. He can get Ximping to sign

  5. If they can’t listen to what this article says then they can forget the debt restructuring for now.

  6. Good article. Strong assertions. One would wish we had a journalist that would seek reaction from a senior government official in the know or the Minsiter of Finance himself, to the issues brought out here. There are obviously a few things from their side that they are not informing us about. To think that the deal just hinges on a Beijing trip by the President or the Finance Minister would seem too simplistic to me.

  7. Politics must always be played with a political conscious mind and NOT with political engagement. It must be known that it took many years before America made an official visit to China.
    It was in 1970 when President Nixon visited China.
    It would have been greatly wrong for our President to have promptly visited China. It was very important to get views from old guards.
    There was a fine thing that was given to President Nixon and indeed President Kaunda in 1968.
    For President Nixon took it that it was a joke, but when he went back to USA, he received a phone call asking him that demand. It was shocking.
    And to our President too, it could have been shocking had he decided to promptly made a visit.
    Now, our President is more than ready to politically make a visit.

  8. What is the motive of this so called outside advice? Just look at the conclusion remarks of this article. It is clear that this advice is not given in good faith. How does reminding the president that the country is not his alone good outside advice. What evidence does this Mwansa have to demonstrate that HH doesnot listen to public opinion?

  9. Why is UPND afraid of talking to China. We owe China money and that is the country we should be negotiating with. The Chinese told the Americans to worry about what they owe China and let Zambia worry about what they owe China. We are talking to people that have the same Deases us ourselves instead of talking to the Doctor.

  10. Graphs are a tradition of Governments world wild as our traditional rulers rely on tradition.
    No one can eat tradition, but it makes people live in harmony with each other.
    Graphs enables Governments to plan well for the country. Otherwise, it will be chipatepante like it was under PF with no census of citizens. Now, how do you balance the economic equation without census?
    Census will enable Government to provide schools, hospitals clinics etc.
    See how markets are, one needs an helicopter to buy tomatoes no wander PF bought them.

  11. Well said.
    I think our president really doesn’t understand how to handle diplomatic relations.
    I still can’t believe that neither he, nor any of his most important ministers have visited China, two years after coming to power. How can you ignore the worlds largest economy? And you owe them money?
    I really can’t understand the lack of practical wisdom here. It’s shocking how hh has put all his eggs in one basket. And sadly he has turned his back on the people who stood with us in the fight for independence, in construction of so much of our infrastructure and military! It’s painful to watch.

  12. The author of this article is very intelligent and knows how to clearly express his ideas. A real analyst.

  13. The one thing the author does tell us is under what terms DRC and Ghana got their deal.
    DRC had to mortage their resources to China.
    Let me share a headline regarding Ghana: China To Take Over Ghana’s Mineral Revenue And Electricity Sales In Default Of 4 Loans, Says IMF Report.
    China has done the same thing to Sri Lanka and Uganda. Once the Chinese get them in a room in China they do not let them out unless and until they force them into these kind of deals
    I applaud HH, he is doing the right thing by not going to China or sending people there.
    He is proud Zambian and a man who negotiates to protect Zambia’s integrity.
    He is not a sell out
    That is why he is multi millionaire and most of you are still paupers

    • A sovereign state can’t be liqidated like a company. Countries can only: delay to pay back; restructure the debt; or be exempted to pay by pardoning. No mortgage there.

      If anything it’s IMF who have our minerals as collateral for the debt with structural adjustment programmes SAP.

  14. China is Ghana’s biggest bilateral creditor, with about $1.7 billion of debt.But Zambia owes $6.6 billion to China. There is no way China will treat Zambia and Ghana the same.
    The author of the article has deliberately forgot to mention that Sri Lanka which owes the same debt amount as Zambia is also struggling to get a nod from China.
    PF cadre mentality on display here. useless article

  15. To put it in simple terms, China wants its dick sucked before anything can happen. They are used to PF on its knees. Never should we borrow from them again.

  16. This article doesnot even detail the conditions under which Ghana obtained so called debt relief from China. There is a lot of information in the public domain on the tough conditions before China offers some countries so called debt relief. For China the interest is to have full access to various natural resources on an exclusive basis as well as to tie important assets of countries that owe China money. It is PF who just borrowed without thinking of the consequences and now PF aligned advisors wants the Government to follow their advice blindly. Forget!!

  17. China must come out clean on who they gave money to to facilitate the debt-trap; if need be GRZ should money-trail hunters and bring the Thieving Individuals who signed for loans as GRZ and pocketted kick-backs. GRZ MUST GET TO THE BOTTOM of this beligerance on China’s part!


  19. This so called pseud-analysis is shallow like Kariba lake in hot season. It just says negotiate with China directly without any pros and cons.

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