By BUUMBA CHIMBULU
BOILING tensions over debts owed to two key African financial institutions risk keeping Zambia and Ghana in sovereign default longer than anticipated, potentially undermining their fragile economic recoveries following years of debt restructuring efforts.
Finance and National Planning Minister Situmbeko Musokotwane, has admitted that in the process of the debt, Zambia has experienced significant challenges in coordinating some creditors, citing the non-bonded commercial creditors, resulting in lengthy negotiations. Commenting on the unfolding situation, Economist Dr. Lubinda Haabazoka cautioned that the implications for Zambia are both real and immediate.
This development could deal a blow to Dr. Musokotwane, who expressed optimism this week that the country is nearing the completion of its protracted debt restructuring process, with a target to finalise agreements with remaining bilateral creditors by September this year.
The successful conclusion of these deals – expected by September 2025 – would mark the culmination of a difficult effort to stabilise Zambia’s financial standing following its 2020 debt default.
However, those plans could be derailed by ongoing disputes with the Eastern and Southern African Trade and Development Bank (TDB) and the African Export-Import Bank (Afreximbank).
The Paris Club group of official creditors has insisted that Zambia and Ghana must restructure debts owed to these two “baby multilateral” institutions – a move both banks are resisting. Afreximbank has argued that the treaty establishing it, which both countries ratified, prohibits debt restructuring.
According to research by think tank ODI, Zambia owes TDB approximately US$555 million and Afreximbank US$45 million.
Meanwhile, Ghana’s exposure to Afreximbank stands at around US$750 million – nearly a quarter of its US$4 billion in commercial debt.
“The current international framework for debt relief has left what we call ‘plurilateral institutions’ in a complete grey zone,” said Thomas Moatti, Director of Lazard’s sovereign advisory group, during a recent Finance for Development Lab panel discussion, citing Afreximbank and TDB as prime examples.
At a separate panel hosted by the Centre for Strategic and International Studies, TDB Group President Admassu Tadesse voiced frustration over African multilaterals being sidelined in global financial discussions only to later face disproportionate demands.
“Some of these traditions and rules are applied to some, and then when you’re an African multilateral, you’re told ‘Ah, you don’t quite meet the standard,’” said Mr. Tadesse. “We’re aligning, we’re accepting the rulings – but it leaves a bitter taste.”
Although both Zambia and Ghana successfully restructured their bilateral and bondholder debts last year, they must still resolve billions of dollars in commercial obligations before credit ratings agencies like S&P and Fitch can lift them out of default status.
African Finance Corporation Chief Executive Samaila Zubairu also weighed in, arguing that African multilaterals, by law, hold preferred creditor status in their respective countries and should not be compelled to accept losses under pressure from external creditors.
“African multilaterals have preferred creditor status by law in the various countries. So the ‘mother multilaterals’, if we are ‘baby multilaterals’, have no say on our preferred status,” he said.
Mr Zubairu noted that limited support from wealthy nations has already forced newer African development banks to operate under higher borrowing costs.
“There is no asking us to restructure without our consent,” he added.
But Dr Musokotwane, during the G-20 Global Soverign Round Table in Washington, called for a more robust mechanism for non-bonded creditors, adding that:
“Because consensus to bring these creditors on board early on in the process through the information sharing mechanism will greatly minimise coordination challenges.
Information sharing among key players at early stages of debt restructuring process helps to facilitate the predictability of milestone completion timelines and the debt distress situation of debtor countries.”
Commenting on the unfolding situation, Dr. Haabazoka cautioned that the implications for Zambia are both real and immediate.
“The revelations in this article highlight a deeply complex and frustrating juncture in Zambia’s debt resolution journey – one that no longer hinges solely on fiscal calculations but now reflects the growing pains of an evolving and often unequal global financial system,” Dr. Haabazoka said.
He stressed that the current deadlock is more than a routine financial negotiation, describing it as “a test of global cooperation, fairness, and recognition.”
Dr. Haabazoka noted that Zambia had made notable progress last year, securing agreements with bilateral creditors and private bondholders to restructure over US$6 billion of its debt.
However, he said, nearly five years after its 2020 default, the country remains mired in a ‘selective default’ status, according to major credit rating agencies.
“African institutions like Afreximbank and TDB play a crucial role in financing trade and development across the continent,” he said. “Yet, they’re being asked to participate in restructuring negotiations without a seat at the table where the rules are made.”
He warned that as long as this impasse persists, Zambia’s access to affordable capital will remain limited – with far-reaching consequences for vital sectors such as healthcare and infrastructure development.
“That means fewer resources for hospitals, schools, and essential services that ordinary citizens rely on,” Dr. Haabazoka added.
