Zambia Investor Briefing: May 2024

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OVERVIEW

• Zambia is moving ever closer to emerging from its debt default. Finance Minister Situmbeko Musokotwane announced this week that nearly all of the holders of the $3 billion outstanding international bonds have accepted the restructuring proposal. According to the minister, “Finalising this agreement with bondholders will create the fiscal breathing space necessary for Zambia to remain on a trajectory of sustainable economic growth”.

• Abu Dhabi’s International Resources Holding (IRH) is reportedly in talks with the government about the purchase of a stake in Konkola Copper Mines (KCM) from Indian billionaire Anil Agarwal’s Vedanta. According to CEO Syed Basar Shueb, “We are talking to the government because it makes a lot of sense that one party manages Mopani and KCM”.

• Turkish company Yeo has entered into a partnership with the Zambian sustainable energy firm GEI Power to invest $65 million in the development of a 60 MWp photovoltaic solar power plant with a 20 MWh battery energy storage in the country.

• In an interview with Global Investor’s investment guide to Africa, President Hakainde Hichilema discussed subjects including Zambia’s mining sector, the government’s efforts in the debt restructuring, and green energy initiatives. Also featured in the edition are Zambia’s High Commissioner to the UK Macenje Mazoka, Albert Halwampa and Professor Biemba Maliti of the Zambian Development Agency (ZDA), Finance Minister Situmbeko Musokotwane, and other Zambian government officials and industry leaders.

• Minister for Green Economy and the Environment Collins Nzovu spoke to Zambia Is Back’s Choolwe Chibomba about the Government’s response to the ongoing drought, climate change resilience, and the country’s role in the global transition to green energy. The minister also gave an interview with The Guardian where he called for reform of climate financing to help African countries avoid the worse impacts of the climate crisis and stressed that Zambia is “ready for investment”.

• Science and Technology Minister Felix Mutati has announced a $54 million investment in Zambia’s information and communications technology sector following a waiver on ICT imports. This was revealed as he welcomed a group from the Common Market for Eastern and Southern Africa (COMESA).

• In a boost for the country’s tourism sector, Zambia clinched the title of Best African Leisure Destination at the 2024 Global Traveller Awards.

A CLOSER LOOK

Mining Developments

Syed Basar Shueb, CEO of the UAE’s International Holding Company (IHC), has spoken to the Financial Times about the Zambian ventures of its subsidiary International Resources Holding (IRH). The company broke into the market last year and made headlines with its acquisition of Mopani Copper Mines. Now, Shueb has told the FT that IHC is expected to make about $1 billion of mining acquisitions this coming year. Among them may be Zambia’s Konkola Copper Mines (KCM): IRH is reportedly in talks with the government about the purchase of a stake from Anil Agarwal’s Vedanta. According to Shueb, “We are talking to the government because it makes a lot of sense that one party manages Mopani and KCM”.

Elsewhere, Canada’s Midnight Sun Mining Corp. has announced it is now “sufficiently funded” to carry out explorations in Zambia after closing a $10 million placement. It has previously partnered with the Jeff Bezos-backed startup KoBold Metals to explore the Dumbwa target within the Solwezi copper project. This will allow Midnight Sun “to explore this vast property with the necessary capital and expertise”, according to the company’s marketing and communications director Adrien O’Brien. Drilling is expected to begin in the coming months.

In the US, the White House senior adviser for energy and investment Amos Hochstein has spoken of the importance of countries like Zambia, as well as its neighbouring DRC, in meeting the global demand for clean energy components and power infrastructure, which will be essential to the green energy transition. Hochstein argued the US must encourage mining projects in these countries to ensure “a diversified, sustainable and equitable energy transition”.

Debt Restructuring

Zambia is moving ever closer to emerging from its debt default. Finance Minister Situmbeko Musokotwane announced this week that nearly all of the holders of the $3 billion outstanding international bonds have accepted the restructuring proposal. According to the minister, “Finalising this agreement with bondholders will create the fiscal breathing space necessary for Zambia to remain on a trajectory of sustainable economic growth”.

The International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva had previously said that “The successful implementation of this agreement will provide significant external debt service relief and further contribute to Zambia’s efforts to restore debt sustainability”.

On 7 May a team from the IMF concluded a two-week visit to Lusaka where they were discussing Zambia’s economic policies for its third review of the country’s economic programme, in order to unlock another funding tranche of $180 million. The IMF praised Zambia’s “commendable progress in implementing crucial reforms under the fund-supported program, including significant fiscal efforts in 2023 despite lower mining revenues”.

Despite the punishing effects of the drought on the country’s economy, the Treasury remains optimistic. Its Secretary Felix Nkulukusa recently announced the country’s economic growth is expected to bounce back next year, with GDP expected to expand by about 6% in 2025 and a similar amount in 2026.

The British High Commissioner to Zambia Nicholas Woolley this month praised the progress made to date regarding the debt restructuring in an interview with ZNBC. He also described the country as a “beacon of democracy”, days before the president launched the new National Policy on Anti-Corruption. Hichilema outlined the government’s focus on key areas which will aid the fight against corruption, namely economic expansion, growth, business and entrepreneurship.

Energy Investment

Turkish company Yeo has entered into a partnership with the Zambian sustainable energy firm GEI Power to invest $65 million in the development of a 60 MWp photovoltaic solar power plant with a 20 MWh battery energy storage in the country. The project, which is slated for commercial operation in September 2025, will provide sustainable energy solutions to Zambia’s power deficit. Yeo’s Vice President of Business Development Yasin Duven said the project, which aims to supply at least 65,000 households, “demonstrates [Yeo’s] commitment to sustainable development in Zambia”.

Foreign Direct Investment

Lusaka hosted the China-Zambia High Quality Development Forum this month in an effort to promote cooperation between the two countries. According to Liu Guoyu, economic and commercial counsellor at the Chinese Embassy in Lusaka, 21 cooperation agreements were signed at the forum to a total value of about $1.03 billion. In a keynote speech Hichilema declared the country ready to welcome more Chinese investments that would boost Zambia’s development agenda in sectors such as agriculture, mining, manufacturing and energy.

A Swedish delegation, led by the Minister for International Development Cooperation and Foreign Trade Johan Forrsell, met with Hichilema at State House. The meeting focused on strengthening trade relations and, with Swedish support, improving Zambian resilience in agriculture, green energy, and water harvesting. Sweden has committed over $200 million to its strategy for development cooperation with Zambia over the period 2024-2028.

Elsewhere, State House has marked the 60th anniversary of bilateral relations between Zambia and Japan by hosting Japanese envoy Takeuchi Kazuyuki.

Regional Partners

The beginning of May saw President Hichilema on a state visit to Kenya at the invitation of President William Ruto. There, he addressed the African Union’s (AU) Africa Fertilizer and Soil Health Summit in Nairobi. In his speech he emphasised the need to mobilise capital and invest in the development of agricultural technology, including the need to make fertiliser widely available and affordable across the Continent. On the summit’s sidelines he met with the US Special Envoy for Global Food Security Dr Cary Fowler to discuss the country’s emergency drought situation.

During his trip the Zambian president also addressed issues of regional insecurity, having been invited to speak at the High Level Mediation for South Sudan. Hichilema once again reiterated that “instability anywhere is instability everywhere” and called for a cessation of hostilities in wider Sudan.

LONG READS

Explainer: Does Zambia’s bondholder deal mean it has resolved its default? (Reuters, 01.05.24)

Why African countries are turning their backs on loans from Beijing (The Africa Report, 03.05.24)

Africa’s top companies 2024: South Africa struggles but progress in wider region (African Business, 10.05.24)

Critical Minerals Africa Summit to profile Africa’s investment outlook (African Business, 13.05.24)

Reimagining Zambia’s restructuring in an alternative New York dimension (Financial Times, 16.05.24)

UPCOMING EVENTS

6 June - The Africa Debate, London, UK    

7 June - Africa Tech Summit, London, UK      

11-12 June - ICA Zambia 2024, Lusaka, Zambia

25-27 June - Africa Hospitality Investment Forum, Windhoek, Namibia

25-28 June - Africa Energy Forum, Barcelona, Spain

26 June - 2 July - Zambia International Trade Fair, Ndola, Zambia   

CONTACT US

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