ECONOMIST Chibamba Kanyama says China is taking advantage of the country’s debt situation to renegotiate its own relationship with Zambia.
Last week, UK Minister for Africa Vicky Ford revealed that there was one international creditor that seemed to be taking a bit more time in Zambia’s debt restructuring.
And sources within the government told News Diggers that China had been apprehensive about committing to Zambia’s debt restructuring programme.
In an interview, Friday, Kanyama said China was using the country’s debt restructuring programme as an opportunity to set out its own terms.
“China saw an opportunity with the IMF deal. I know that China saw the staff agreement with Zambia for a possible programme as positive news. This is my perception. It has been positive news for China because they know that standing in the way between the success of the programme and not getting it is making an agreement with all creditors. Because IMF would like to restructure this debt and before it can come on board, it wants to ensure that all creditors agree to this arrangement and in this arrangement is restructuring the debt instead of Zambia paying these debts as scheduled. They should be willing to do either some haircuts or restructure to postpone repayment dates,” he said.
“There has been an agreement and China is aware that all creditors have to agree to this new deal. Being the largest single creditor to Zambia, it knows this is its best opportunity to have its own terms and I know that China would like to have its own terms. It is taking advantage of the debt situation to renegotiate its own relationship with Zambia. That is how I see it. That is why you found earlier this year that the Chinese Ambassador was visiting our President at the State House. To some of us who have been following the trends, it was a huge development and like we anticipated, we knew that at one point, the government will be smiling with China not because it wants to but because it needs to restructure the debt and China is standing in the way of restructuring the debt.”
Kanyama said he was sure that China was seeing an opportunity to cement its relationship with Zambia, given the change of government.
“China will definitely come on board. The delays structured to China are a normal part of negotiations. I am very sure China is seeing an opportunity to cement its relationship with Zambia given the change of government. Besides, China should not be seen as one single creditor. Much of this debt is commercial debt and may involve a multiplicity of creditors. It is only logical that they have to make internal consultations about how to treat Zambia’s debt in the context of other non-Chinese creditors ahead of the IMF programme. I do not, therefore, see China standing in the way of an IMF programme that eases the way for coordinated management of the Zambian debt,” he said.
“In any case, I see the whole debt restructuring issue as an opportunity for China to cement its relationship with the new government. Chinese companies still want to do business with the Zambian government in areas like infrastructure investment. Personally, when the IMF Staff Agreement was announced last year about a possible programme but conditional to reaching an agreement with creditors in debt restructuring, I knew that China would choose the bigger picture; the bigger picture being leveraging the negotiations for enhanced cooperation between Zambia and China. Therefore, I see the perceived delays as just part of the strategy. Behind the scenes, I am very sure that China is taking a very active role in facilitating these negotiations.”
Kanyama noted that China had invested significantly in almost all sectors in Zambia, adding that debt restructuring was an opportunity it wanted to leverage
“My take on this issue is that China wants to take something out of it. China has a lot at stake in the Zambian economy, China has invested significantly in almost all sectors in Zambia. The Chinese nationals are doing business in Zambia, it has been one of the bigger winners in public tenders and it wants to continue to enjoy that opportunity. Debt restructuring is the opportunity it wants to leverage,” said Kanyama.
“Restructuring the debt is apparently in China’s interest given the circumstances under which Zambia is in right now. We need to revitalize this economy. If China really means well and it wants to cement its investment in Zambia, it must also first of all look at the bigger picture win and the bigger picture win is that Zambia’s economy must be brought back to stability. We need to have stability, we need to create the right environment for bigger investment, better investment. Every investor will only thrive when the economy is stable and when other investors are coming in. If there is any country in the world right now that is going to win so much about Zambia’s economic stability is China and South Africa. A win for Zambia is a win for them.”