Zambia Default: Lessons for other African countries


Friday, November 20, 2020/ 02:30PM / United Capital Research / Header Image Credit:


Last Friday, Zambia became the first African economy in the pandemic era to default on a part of its debt after predictably failing to make an interest payment on a Eurobond. Recall that the country, in September, requested that interest rates for 3 Eurobonds be deferred and in October, missed a $40mn interest payment due on one of the bonds.  


Notably, Zambia is not the only African nation with debt struggles. For instance, Kenya, Ethiopia, Angola, and Nigeria, are seeing rapidly increasing levels in dollar-denominated debt, aggravated by the battle with COVID-19. Notwithstanding, the conversation around debt management and default risk is more nuanced. Zambia is an extreme case in an environment plagued by systemic issues, including but not limited to subpar revenue collection, currency devaluation, commodity price decline, lack of transparency and irresponsible fiscal spending.  


While it is important not to paint other African countries with the same brush as Zambia, these countries can take a few lessons on how to better handle their precarious debt situations. Despite the G20's recent agreement on a common approach for restructuring government debt, Africa's increasing dependence on debt relief-resistant China might dampen the impact of this otherwise unsustainable approach which fails to address the issues contributing to the debt crisis. Summarily, African countries must tackle the fundamental issues plaguing their economies. 


Top African Stories 

  • G20 leaders urged to provide funds for COVID-19 vaccines, drugs, tests Read more  
  • Coronavirus cases in Africa surpass the 2 million mark: Reuters tally Read more 
  • Kenya Breweries Limited revises grain demand on re-surging alcohol sales. Read more  
  • Tiger brands anticipates 30% decline in full year earnings. Read more  
  • South Sudan Secures First IMF Loan. Read more 
  • Unemployment Rate Soars in South Africa Read more  
  • Safaricom profits fall after M-PESA scraps fees. Read more  
  • Kenya faces timber shortage as demand for wood grows. Read more 
  • Rwanda recruits former Credit Suisse boss Tidjane Thiam to boost Kigali's finance offer. Read more  
  • Airtel Africa to sell 4,500 towers to lower debt Read more 


Looking Forward 



Oct-2020 Inflation Report - November 23rd 

Oct-2020 Net Reserves - November 22nd 



Oct-2020 M2 Money Supply - November 23th 



Oct-2020 Inflation Report - November 30th 



Oct-2020 Inflation Report - November 22nd 



Nov MPC- November 24th 

Oct-2020 M2 Money Supply - November 28th 

Oct-2020 Private Sector Credit- November 28th 


South Africa 

Oct-2020 Inflation Report - November 25th 

Oct-2020 Private Sector Credit-  November 30th 

Oct-2020 Trade Balance - November 30th 

Oct-2020 Monthly Budget Balance - November 30th  



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