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.

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