Country Report Zambia April 2010

Economic policy: Mr Banda visits China

In late February Mr Banda made a nine-day state visit to China at the invitation of his Chinese counterpart, Hu Jintao. During his trip Mr Banda secured a US$1bn concessional loan from the Chinese authorities. Although the money will not all be released at once, it remains fairly substantial, amounting as it does to the equivalent of 40% of Zambia's total public external debt stock. The loan represents a part of China's commitment-expressed at the summit of the Forum for Africa-China Co-operation (FOCAC) in Egypt last year-to provide US$10bn in concessional loans to Africa over the next three years. The Zambian government has said that it will spend 70% of the loan on investments in infrastructure and the other 30% on the development of Multi-Facility Economic Zones (MFEZs). Although Chinese aid to Zambia remains small compared with total aid inflows, the loan reflects China's growing presence in Africa and points to a potentially substantial new source of financing, particularly for infrastructure projects. Mr Banda's delegation also signed a number of agreements while in China. The most salient of these were an agreement with the Chinese government to promote co-operation in the mining sector and an agreement with the China Non-ferrous Metal Mining Corporation (CNMC), under which the CNMC will invest in the development of a number of MFEZs in Zambia, including one near Lusaka International Airport.

© 2010 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information