After months of negotiations, China and Western creditors are providing relief for $6.3bn of Zambia’s public debt.
Hichilema seems to have had superhuman reserves of patience and diplomatic politesse, needing every ounce of both to win some breathing space for his country from the barons of the international financial system.
“First and foremost, we go back to what we intended to do, to restructure the economy […] then we can take care of the people; it’s as simple as that,” says Hichilema, sporting a smart blue suit sans cravat on an uncharacteristically sunny day in the British capital.
He was speaking to The Africa Report the day after the coronation of King Charles III, which he attended with several other African leaders.
We inherited a huge setback and [the debt overhang] is really restricting our flexibility to rebuild the economy, but Zambia has done its part
According to Hichilema, his government’s priorities are “governance issues, rule of law, human rights, corruption […], but the huge debt overhang is acting like a python around our necks”.
“We inherited a huge setback and [the debt overhang] is really restricting our flexibility to rebuild the economy, but Zambia has done its part,” says Hichilema.
Since the government of his predecessor, Edgar Lungu, defaulted on its foreign-debt payments in November 2020, Zambia has become a test case for the international financial system’s ability to manage such crises.
The system has failed badly, to the detriment of many millions of citizens. Now Sri Lanka, Chad, Ethiopia and Ghana have joined Zambia in this league of countries trying to restructure their foreign debts.
Part of the problem is the heterogenous, sometimes competitive, mix of creditors, each pursuing their own interests – from international banks and hedge funds to Chinese policy banks, the IMF, the World Bank and Western governments in the Paris Club.
Everyone agreed that Zambia had met the conditions to qualify for debt restructuring set out under the G20’s Common Framework mechanism – an attempt by the world’s biggest economies to establish a system for managing financial crises in developing economies.
However, it lacked a sense of urgency. Despite the rhetoric, talks dragged on, holding back Zambia’s recovery. Perhaps it’s because the biggest economies – the US and China – didn’t see defaults on the $326bn debts owed by some 70 low-income countries as a systemic threat to the global economy.
Zambia had been working with the G20 Creditor Committee set up last June and jointly chaired by France and China with South Africa as the deputy chair. It presented its proposals for debt restructuring and the committee was due to meet and respond in May.
Georgieva on his side
IMF managing director Kristalina Georgieva had been one of Zambia’s and Hichilema’s most active supporters in the negotiations.
The IMF finally made a $188m disbursement to Hichilema’s government after bilateral creditors agreed to the much-postponed debt-relief deal.
Even Hichilema’s tolerance was being stretched before the announcement. “We were required to do certain things, as Zambia, and we’ve done [them],” he says.
Zambia is being closely watched by other developing economies battered by the post-pandemic financial pressures.
“This framework must be seen to deliver because other indebted countries are waiting to see how [it] works. I think Zambia is a guinea pig,” he says.
As Hichilema’s government struggled with debt negotiations, the Patriotic Front (PF), the former ruling party, fired off jibes, criticising its stance towards China.
“Basically, we’ve reset our relationship with China,” says Hichilema, explaining that he is fostering strong ties with Beijing and that Chinese companies maintain a strong presence in Zambia. He says Lungu’s PF government took on unmanageable levels of Chinese debt and he urges the opposition to let him get on with rebuilding what they “destroyed”.
Hichilema maintains that he is ignoring party politics to focus on Zambia’s economic recovery. He points to the $8.59bn in foreign investment pledged last year, and a stabilisation of the Kwacha, with economic growth projected to hit 4.2% this year.
From ore to cathode
After fixing its inherited debt crisis, the next priority for the government is to expand trade with other countries in the region. Top of the list is a project with DRC to produce lithium-ion batteries for electric vehicles.
“Most of the minerals that are in Congo and in Zambia are along the borders. I’m not sure those who drew our borders, what their intention was – that’s a discussion for another day,” he says.
In April 2022, Zambia signed a memorandum of understanding with its northern neighbour to develop the battery value chain. The government has secured land in Ndola, Zambia’s central Copperbelt Province, for a battery-manufacturing plant.
“Afreximbank [African Export-Import Bank] is working with us on the pre-feasibility study. As I’m talking to you now, the team is in Zambia, to work on that initiative,” says Hichilema.
The plan is key to the region’s efforts to use its mineral reserves to power a manufacturing base for the green economy.
“We must mine, process and add value […] right from the copper ore, through concentration, smelting to copper cathode, we want to do more,” says Hichilema.
We have no problem in being too ambitious
Some critics argue that his plans to boost regional trade are too much, too soon. “We have no problem in being too ambitious,” he replies. “We have to be ambitious in order to achieve our intentions.”
Crucial to these plans is the African Continental Free Trade Area (AfCFTA). To some applause at the Transform Africa Summit in April at Zimbabwe’s Victoria Falls, Hichilema argued for more regional cooperation on issues, such as checks on trucks crossing borders.
In another key stake in the green economy, Zambia has signed a $2bn solar power deal with Masdar in the UAE to generate an additional 2,000 megawatts of electricity. Another $2bn comes from a pledge by seven British companies to invest in renewable-energy projects, and Hichilema says that there are more possibilities with Chinese investment.
“Once they all are actualised, this will take us closer to an additional power of 5,000 megawatts,” he says. “Compare that to the energy that we generated over 57 years, a total of 3,500 megawatts […] so we will have more than doubled that in a short space of time.”
Going after state capture
Part of Hichilema’s investment drive involves showing that the government is tackling the corruption and state capture that skyrocketed under the Lungu government and still scars local businesses and the public sector.
“It’s been a disease that colleagues go into government and deliberately create no separation between public and private resources. We have a clear view about that,” he says.
His words resonate just days after Zambia’s police questioned ex-President Lungu’s wife, Esther, after surrounding her house and demanding to search it. This follows a claim that Mrs Lungu had stolen three cars.
Hichilema rejects complaints that the government is singling out members of the PF. He insists that he holds everyone to the same standard, no matter what their affiliation.
“We want to work on reuniting the country, which was divided by our colleagues,” he says.
Those divisions morphed into violent clashes between rival parties, the closure of independent newspapers and radio stations as well as the detention of opponents of the PF government, such as Hichilema.
After police attacked and ransacked his house, Hichilema was detained for 127 days in 2017 on trumped-up treason charges based on claims that he had obstructed Lungu’s presidential motorcade.
After the charges were dropped and he was released, stories emerged about attempts to kill him in jail, but Hichilema ploughed on, winning the presidency four years later.
“Fear is not part of my genetic makeup,” he says, looking out of the window in London and cracking a broad smile.
There's more to this story
Get unlimited access to our exclusive journalism and features today. Our award-winning team of correspondents and editors report from over 54 African countries, from Cape Town to Cairo, from Abidjan to Abuja to Addis Ababa. Africa. Unlocked.
Already a a subscriber Sign In
Also in this in Depth:
two year deadlineGabon’s new Prime Minister Raymond Ndong Sima: ‘I hesitated’ Heading Gabon’s new government, ex-opposition member Raymond Ndong Sima has taken up his post as prime minister of the transition.
Nepo babiesZimbabwe: Ignoring the party, Mnangagwa selects his friends and family cabinet Zimbabwe President Emmerson Mnangagwa has stocked the cabinet with friends and relatives, an official change from his first term.
Indigenous pressureNigeria: Court ruling reignites clamour for Abuja’s state-status After Nigeria’s presidential election court ruled that the capital should be treated like a 37th state, Abuja’s original inhabitants are calling for a governor and house of assembly.