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Zambia is in the process of restructuring its debt with regional lenders — including the African Export-Import Bank (Afreximbank) and the Eastern and Southern African Trade and Development Bank (TDB) — and will remain in default on payments to these institutions until the process is concluded, Finance and National Planning Minister, Situmbeko Musokotwane has reportedly confirmed.
According to Moneyweb, the move mirrors Ghana’s recent debt restructuring strategy and directly challenges Afreximbank’s claim to “preferred-creditor status,” a position the bank maintains should exempt it from losses typically borne by commercial lenders.
Both Zambia and Ghana are operating under the G20’s Common Framework, an initiative designed to coordinate debt relief efforts across a wide range of creditors, with an emphasis on avoiding preferential treatment for any single group.
While Zambia had successfully reached agreements with its bilateral creditors and international bondholders, it continues to negotiate terms with commercial lenders, including approximately US$543 million owed to TDB and over US$45 million to Afreximbank.
Read more: Debt restructuring a failure, excuse to borrow more, opposition Patroitic Front alleges
Speaking on the sidelines of the African Development Bank’s annual meetings, Musokotwane reaffirmed that Zambia would restructure its obligations to regional lenders and would remain in default until agreements are finalized.
“It was agreed that Afreximbank and the Trade and Development Bank do not have preferential status — their lending is considered commercial,” Musokotwane told Bloomberg.
He said: “We cannot service their debt until we agree on the restructuring.”
He added that creditors collectively classified these debts as commercial, subjecting them to the same restructuring terms as other non-preferred creditors.
“We have to abide by the rules agreed upon with all creditors. As much as we would prefer these African banks to hold a preferential status, that’s not our decision. It was the collective decision of the creditors,” he said.
Meanwhile, Afreximbank Managing Director Chandi Mwenebungu recently told investors that the bank’s preferred-creditor status was enshrined in its establishment agreements and that it had not participated in debt restructurings in Ghana, Malawi, or Zambia.
“All three are up to date on their payments,” Mwenebungu claimed.
However, Chris Humphrey, a senior research associate at ODI Global and author of a recent study on the issue, pointed out that recognition of preferred-creditor status ultimately depends on whether other lenders accept those claims.
“In Zambia’s case, the government said its creditors determined the debts were commercial and subject to restructuring,” Humphrey noted.
The outcome of Zambia’s ongoing negotiations could set a significant precedent for the future treatment of regional development banks in African sovereign debt restructurings, potentially reshaping creditor hierarchies and lending practices across the continent.
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