Zambia’s economic problems are far from being over. Chinese companies made it clear that they have no intention to restructure existing debt.
These loans are a part of a Belt & Road Initiative, which is a global development strategy adopted by the Chinese government in 2013. It involves infrastructure development and investments in up to 70 countries and international organizations in Europe, Asia, and Africa. This program has, however, created problems for countries that are unable to pay the debts on time.
Moreover, this project is not elevating Zambia’s status, and the republic is facing problems in many industries. For example, two countries, Zambia and Zimbabwe, suffer from 20-hour power cuts. Severe droughts have harmed hydropower plants. As sovereign debt continues to grow, supply fell by 810 megawatts in November 2019, meaning Zambia is unable to pay electricity imports.
China Exim Bank issued a warning in March 2019 and threatened that it would stop work on infrastructure project payment. The bank has thought of starting to gather all the debts other countries owe it. Exim Bank also provided a $232 million loan for this venture. Zambian government should eventually come up with a plan on how to deal with the excessive amount of debt.