Zambia Officials Slam "Overblown" Sovereign Debt Risk Perceptions Costing Billions
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Zambia’s sovereign debt risks are "overblown" by investors unfairly lumping African nations under negative governance stereotypes, a Treasury official stated at a Cape Town conference, imposing a "prejudice premium" of nearly 3 percentage points on borrowing costs and costing the continent billions in extra debt service. Secretary to the Treasury Felix Nkulukusa highlighted mispriced risk constraining growth despite reform progress.
Zambia completed a years-long restructuring of over $6 billion in external debt, including Eurobonds maturing 2022 ($750m), 2024 ($1bn), and 2027 ($1.25bn), emerging from its 2020 COVID-era default—the first African sovereign case. Public debt ballooned from $14.7 billion in 2021 to over $28 billion by early 2026, but recent efforts focus on sustainability.
Credendo upgraded Zambia’s medium-to-long-term political risk in July 2025, though structural challenges persist: copper price volatility (key export), climate shocks, and reform momentum risks. Officials contend current spreads fail to reflect stabilisation gains.
The critique underscores broader Africa debt dynamics where perception gaps hinder fiscal space, echoing calls for recalibrated ratings post-restructuring. Zambia pushes for index inclusion of domestic debt to broaden investor access.
