Zambia’s (almost) debt deal

The Zambian debt crisis has had a huge impact on people right across the country. The ensuing cuts in spending on healthcare and education have been intensely felt by communities where over 61% of the population earn less than $2.15 a day1. That’s why campaigners have been demanding debt cancellation since the start of the crisis.  

External debts to lenders like financial giant BlackRock, rich countries, and the International Monetary Fund (IMF) and World Bank shot up from 2015. And in 2020 Zambia became the first country in Africa to default because of the economic turmoil caused by the Covid-19 pandemic. Last month it seemed like a deal to restructure debts had finally been reached with private lenders – the big banks and hedge funds that hold $4.5 billion of Zambia’s debt. But they’ve been forced back into negotiations by other lenders.  

Debt Justice campaigners in the UK have been standing shoulder to shoulder with activists in Zambia and around the world for the past three years to demand a fair debt deal. So why was the deal rejected and what happens next?  

The global debt crisis, big banks and hedge funds   

What happens in Zambia doesn’t just matter for Zambia, it matters for the 54 other countries that are also currently experiencing a debt crisis.  

After the initial emergency at the start of the pandemic, where dozens of countries were plunged into unmanageable debt, the G20 group of self-appointed most powerful countries set up what was meant to be a new process for countries to be able to restructure their debts, called ‘the Common Framework’. But three years on only Zambia and three other countries have applied.  

The hold up has largely been due to big banks and hedge funds refusing to budge and restructure debts. With almost half of all debts for the lowest income countries owed to private lenders, it’s crucial they take part.  

In Zambia they’ve been stuck between a rock and a hard place, unable to move forward with debt restructuring that could free up millions to invest in healthcare, education and dealing with the climate emergency. The injustice at the heart of the crisis is plain to see, with their biggest bondholder, financial giant BlackRock, potentially receiving up to 110% interest on the loan if paid in full.  

That’s why Debt Justice campaigners took to the streets alongside activists in Zambia and New York to demand BlackRock cancel Zambia’s debts. Over 10,000 of you signed petitions, contacted your MPs and took action in support of the campaign.  

All of that pressure has helped get private lenders to the table, and unlocking a better debt deal for Zambia could mean other countries feel more confident to try and restructure their debts.  

Debt Justice campaigners outside BlackRock’s London office Photo: David Mirzoeff/Debt Justice

Why was the deal rejected?  

Back in the summer Zambia reached a deal with state lenders, a crucial step forward, that highlighted the lack of movement from private lenders – big banks and hedge funds that were still making millions in interest.  

In October we heard that a new deal had final been reached with these private lenders, but this deal quickly fell apart when it was clear that they would be getting a better deal than other lenders. Under the deal  banks and hedge funds would have been effectively repaid 73 cents for every $1 originally lent, whereas governments will effectively be repaid only 55 cents.  

While the criticism isn’t exactly based on ensuring Zambia got a better deal, forcing private lenders back to the negotiating table should result in better outcome, we just don’t know when that will be.  

It’s unlikely that other debt restructuring deals will move forward quickly while this is still up in the air. Lenders are reluctant to come to the table if they think they will be treated differently, but one change – a new law, could make all the difference.  

A new law to make sure countries can get out of debt  

Incredibly, 90% of the debt contracts for the lowest income countries are governed by UK law. This means that by updating this law we could make sure all countries get a fairer deal.  

With legislation, countries and private creditors would know from the start how much creditors are entitled to – so negotiations should be quick and fair to all sides.  

Earlier this year thousands of you added your name to the open letter from Zambian campaigner Precious Kalombwana, who told us that:  

“The debt crisis in Zambia is severely affecting our communities. We can’t afford to eat three times a day, and we can’t afford to address the devastating impacts of the climate crisis affecting us. Instead of supporting Zambian people, the global north is allowing companies like BlackRock to profiteer from our debt. We need urgent debt cancellation so we can prioritise the needs of my people, not the profits of private companies.” 

Zambian campaigner Precious Kalombwana
Zambian campaigner Precious Kalombwana

With a likely general election in the UK now is a crucial time to be raising the issue with your MP.  

Together we’ve been part of some amazing campaigning to try and win debt cancellation for Zambia and other countries in crisis. Next year we need to ramp up the campaign and make sure we #CancelTheDebt.  


  1.  https://www.worldbank.org/en/country/zambia/overview
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