'Black Mamba Kiss of Death': Zambia Criticizes Foreign Debt Interest Rates
12:53 GMT 17.02.2023 (Updated: 08:04 GMT 18.02.2023)
© AFP 2023 / RODGER BOSCH
Subscribe
Zambia defaulted on a $42.5 million payment on a Eurobond in November 2020, with the country's external debt-to-GDP ratio exceeding 100%. According to the African state's authorities, the total external debt amounted to $14.87 billion as of June 2022.
Zambia needs reductions to the principal of its external debt, the country's president, Hakainde Hichilema, said on local radio on Thursday, criticizing the "suicidal" interest rates which he compared to a "black mamba kiss of death."
The country has to "be able to get the principal down," he told Zambia's radio.
“We’ll be able to renegotiate the reckless interest rates that our colleagues agreed — 10, 11, 12%. Suicidal. That’s a black mamba kiss of death,” Hichilema said.
The statement came while Zambia is grappling to achieve a $13.04 billion foreign debt restructuring under the G20 Common Framework after the country defaulted in November 2020. The crucial part of the external debt of $6 billion was provided by Chinese creditors, according to the official government data.
The country's external debt was reportedly taken on by previous governments before Hichilema was elected president in August 2021.
“One of the things we are pushing is to make sure that the key creditors — China included and others — come on board,” Hichilema said. “Some of the countries are not used to the approach which is being taken on the debt restructuring. So we are looking at how to combine the issues that will be acceptable to them and to us and to the world.”
Another African country, Ghana, has already addressed that framework, requesting a revamp in January.
"There is the likelihood that Ghanaian external debt restructuring could occur ahead of Zambia,” said Samantha Singh, senior markets strategist at Rand Merchant Bank. She explained that the bilateral component of Ghana's overall debt - especially the part of its debt owned by China - is not as large compared to countries seeking debt treatment under the framework.
As of October 2022, Ghana's public debt was equal to $37.4 billion, of which 58% was external with only $1.7 billion owed to China.
High external debt is one of the problems persisting in many African countries. Not only Ghana and Zambia experience issues paying their debts. According to a 2022 report by the World Bank, more than half of low-income countries, most of which are African, fail to cope with their foreign debts with high debt-to-GDP ratios.
Concerning Africa's foreign debts issue, Ghana's President, Nana Akufo-Addo addressed African nations in December 2022, urging them not to get loans from the West anymore.
“If we stop being beggars and spend African money inside the continent, Africa will not need to ask for respect from anyone, we will get the respect we deserve. If we make it prosperous as it should be, respect will follow,” he said at the US-Africa Summit in Washington, DC.
Speaking on the external loans of African nations in June 2022, Senegalese president and the outgoing chairman of the African Union, Macky Sall, criticized international organizations for giving Africa a bad deal. He also recognized the crucial role of the African Development Bank and African Export-Import Bank (Afreximbank) in the continent's development.
“The rules are unfair, outdated, and need to be disputed,” he said at the ECA’s Conference of African Ministers of Finance, Planning and Economic Development in Dakar, Senegal, adding that high interest rates of borrowing from international organizations slows the development of Africa.
At the same time, 2023 is seeing more countries expected to join Chad, Zambia, Ethiopia and Ghana in attempts to restructure their external debt under the G20 Common Framework, according to Antonio Pedro, the executive secretary of the United Nations Economic Commission for Africa.
