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Zambia’s Debt Deal Hits a Snag: Why Afreximbank’s Role Could Reshape Africa’s Financing Future

  • Writer: Derry Thornalley
    Derry Thornalley
  • Sep 24
  • 2 min read

Zambia was supposed to be turning the page on its debt crisis. After reaching a landmark agreement in June with private creditors to restructure $3.8 billion of external debt, Lusaka seemed set to finally exit default after four long years.


But just as the ink was drying, a new hurdle emerged — one that could ripple across Africa’s financial architecture.


At the heart of the standoff are two big development lenders: the African Export-Import Bank (Afreximbank) and the Trade & Development Bank (TDB). Unlike private bondholders and bilateral creditors, these banks are resisting demands to take losses. They argue that, as development finance institutions, they deserve “preferred creditor status,” meaning their loans should be treated like IMF or World Bank debt — exempt from writedowns.


For Zambia, this creates a serious problem. Without all creditors on board, the restructuring cannot be finalised. And for Africa, the implications go even deeper.


Why This Matters

This isn’t just a Zambian issue — it’s a test case. If Afreximbank and TDB are forced to accept haircuts, it could set a precedent for how African development lenders are treated in future sovereign crises. That, in turn, might make them less willing (or less able) to step in quickly with financing during emergencies.


On the other hand, if they are shielded entirely, it raises concerns of fairness — why should private creditors and bilateral partners take losses while development banks walk away untouched?


The outcome could redefine the rules of engagement between African borrowers and their lenders.

Zambian Kwacha

Zambia’s Balancing Act

For Lusaka, time is money. Remaining in default keeps borrowing costs high, limits access to international capital, and undermines investor confidence. The government has already restructured deals with China and Paris Club creditors. The Afreximbank-TDB standoff is the last major piece.


Finance Minister Situmbeko Musokotwane now faces a delicate diplomatic task: resolve the dispute without alienating the very institutions Zambia relies on for future trade and infrastructure finance.


The Bigger Picture

Zambia’s saga highlights a fundamental tension in Africa’s debt story: how to balance immediate relief with long-term access to development finance.


If handled constructively, this moment could lead to greater clarity on creditor hierarchies, better crisis frameworks, and stronger regional financial governance. If mishandled, it risks scaring off much-needed capital at a time when African economies are already grappling with tighter global conditions.


For now, Zambia’s debt crisis is more than a domestic struggle. It’s a regional stress test — one that could reshape the way African nations and their lenders navigate the next decade of sovereign finance.

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