January 2023 has been a busy month for President Hakainde Hichilema of Zambia, as the country continues to grapple with the effects of load-shedding following the historical reduction of water levels in the Kariba Dam which has impacted the country’s generation capacity of electricity.
With this energy deficit, Zambia and Zimbabwe are finding it difficult to keep their lights on, as the Kariba Dam is the primary source of electricity for both countries. In addition to the energy crisis, President Hichilema has been focused on restructuring Zambia’s debt this month.
Zambia has undergone a shift in its foreign policy, as the Hichilema administration is considered pro-western, breaking away from the past decade of looking towards China for help. Over the last 10 years of the Patriotic Front administration, China had become the center of Zambia’s foreign policy, leading to over $6 billion in debt contracted from the Asian nation. The new government is now trying to make strides in its relationship with the West.
Between 22 and 24 January 2023, Zambia hosted United States Treasury Secretary Janet Yellen and International Monetary Fund (IMF) Managing Director Kristalina Georgieva. Secretary Yellen was in Zambia to promote US investment and offer support to the country, while Ms Georgieva was in the country to follow up on economic reforms.
During her stay in Zambia, Secretary Yellen visited an American company that produces anti-retroviral and malarial drugs in Lusaka, and she also visited Java Foods, a private company owned by lawyer and entrepreneur Monica Musonda. Secretary Yellen also opened the Emergency Operations Center at the Zambia National Public Health Institute, which was funded by American taxpayers.
During her visit, Secretary Yellen was asked about the role the United States plays in ensuring China’s participation in the debt restructuring process for Zambia. In response, she called out China, saying it was a hindrance to the talks. The following day, a Chinese Foreign Ministry spokesperson in Beijing issued a strong statement against Secretary Yellen’s remarks.
Secretary Yellen also visited small-scale farmers in the central Zambian town of Chongwe who are benefiting from the Green Climate Fund, which is helping them engage in climate-resilient farming practices.
During her visit, Secretary Yellen discussed the importance of taking urgent action to adapt agricultural practices and technology to the changing climate, and she emphasized the United States’ commitment to the Green Climate Fund and its latest $155 million contribution to the Global Agriculture and Food Security Program.
“We will work together to improve Africa’s access to global agricultural commodity markets and meet its growing demand for fertilizer. And we will promote effective agricultural practices and approaches, including strengthening climate resilience, ” said Dr Yellen
“We must take urgent action to adapt agricultural practices and technology to the changing climate. The project we are visiting today helps small-scale farmers better manage the impacts of climate change. It’s funded by the Green Climate Fund, which the United States is proud to be a part of. We are committed to making sure that the Fund has sufficient resources to carry on this important work. We are also advancing climate adaptation through our latest $155 million contribution to the Global Agriculture and Food Security Program,” she added.
Later, Secretary Yellen met with President Hichilema at the State House where they discussed several issues, including Zambia’s estimated $13.6 billion debt with its various lenders. Secretary Yellen emphasized the United States’ stance that all major bilateral official and private creditors meaningfully participate in the debt relief process, including China.
“The United States insists that all major bilateral official and private creditors meaningfully participate in this debt relief, including China. It is our view that timely and comprehensive debt treatment can serve the interests of both debtors and creditors, ” she said during the meeting.
President Hichilema and Secretary Yellen also discussed how Zambia can help to tackle global challenges that have serious ramifications at the national level, including food security, which has worsened in this country and globally over the past year, as well as investing in healthy populations and preparedness for future health shocks.
On his part, President Hichilema thanked the US government for its support of his administration and emphasized the need for a speedy resolution of Zambia’s debt restructuring process so that the country can focus on stabilizing its economy and creating opportunities for its citizens.
President Hichilema expressed appreciation for the support given by American citizens in areas such as health and education, as well as the $8.3 million from the Millennium Challenge Corporation towards the second compact aimed at alleviating poverty in Zambia.
IMF Chief Visit
IMF Chief Kristalina Georgieva recently visited Zambia and engaged in several key events. During her visit, she met with the Minister of Finance, Governor of the Central Bank, and President, gaining a deeper understanding of the country and its people.
At a town hall meeting at the University of Zambia, students asked about the terms of the $1.3 billion credit facility the IMF provided in 2022 as part of its debt restructuring program.
Georgieva also visited Matipula Primary School in Chongwe District to observe the implementation of the Free Education Policy, which has been in effect since 2022. She saw how the policy has attracted thousands of children to attend school for free from grades 1 to 12. She expressed her support for the policy in a Facebook post, noting its importance for investing in the people of Zambia.
“Zambia is doing the most important investment of all—investing in its people. I saw today how “free education for all” is helping the bright minds at Matipula Primary & Secondary School, and how prioritizing social spending makes a real difference in people’s lives,” she wrote on her Facebook page.
During a meeting with President Hichilema, the topic of debt was addressed, with Georgieva encouraging swift resolution to Zambia’s debt situation in order to preserve its positive growth momentum and complement its reform efforts.
“Zambia is making tremendous progress on reforms, at what is a particularly challenging time for the world economy. Zambia also needs a swift resolution of its debt situation to complement these reform efforts and preserve the positive growth momentum. We recognize that these are complex and challenging discussions, but it is clear from my visit that Zambia is doing its part, so I strongly encourage creditors to move forward and reach an agreement on a debt treatment as soon as possible,” observed.
The Finance Minister, Situmbeko Musokotwane, expressed gratitude for the constructive discussions with partners and emphasized the urgency of reaching a debt restructuring agreement for the benefit of Zambia’s economy and its people.
“We are grateful to all our partners for their continued, constructive discussions and work towards reaching an agreement on our debt restructuring. Finding a resolution to our debt burden as quickly as possible is essential for Zambia. It will help us achieve our medium-term ambitions of providing economic opportunities to all Zambians and becoming a middle-income country that is at the forefront of supporting the global energy transition. Reaching an agreement with creditors will help ensure that our economy rebounds and achieves sustained growth. This is in the interest of both our creditors and the Zambian people, “he said.
Zambia has also received support from other high-level international officials, including UN Under-Secretary-General Vera Songwe and French Minister of State Chrysoula Zacharopoulou.
President Hichilema and US President Joe Biden will co-host the next US-African Leaders Summit in Washington D.C. in March 2023, following the inaugural summit held in December 2022. As President Biden is also scheduled to visit Africa later in 2023, many Zambians hope for a visit from him, given the strong ties between the two countries.