U.S.-China Competition in Africa Intensifies

China’s ambassador to Zambia said they would welcome U.S. competition in Africa if it brings more benefits to the continent. Ambassador Du said during an address about Beijing’s role in Zambia’s debt restructuring that China is not looking for competition with the United States but neither does worry about it. “China wants competition to bring benefits for Zambia”, Du added.

China is Zambia’s biggest bilateral creditor, accounting for almost 75% of its total loans. It is also co-chairing a committee negotiating a debt restructuring after the country became Africa’s first pandemic-era sovereign defaulter in 2020. Relations between the two sides have cooled since President Hichilema took office a year ago, as he has forged closer links to nations including the US and the UK.

That shift contributed to delays on the debt revamp that wasn’t resolved until Hichilema spoke with Chinese President Xi in May.

If the US wants to compete with China in Zambia and in Africa, then it should do so in the form of projects such as multibillion-dollar, China-funded hydropower Kafue Gorge Lower project, Du further stated. The project will generate 750 megawatts of electricity and is estimated to earn $1 million a day from power sales.

Zambia announced in 2020 it needed to restructure external debts that grew to $17.3 billion by the end of 2021. It’s doing so under the G20’s Common Framework rules. The framework incorporates the rich creditor countries as well as China, which isn’t a member, but is the world’s biggest official bilateral lender. Beijing has resisted to join the committee at first, as it intended to revamp the debt bilaterally. Hichilema’s call with Xi convinced China to join.

Zambia’s Finance Ministry said the government plans to sign a memorandum of understanding with official creditors by the end of the year. Under the Common Framework, that legally non-binding document sets the key parameters of the restructuring, and the government will then sign bilateral deals with each creditor.

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