Zambia is reportedly in talks with China over a possible takeover of the country’s electricity company, ZEWASCO, after defaulting on loan repayment.
This is according to a report by Africa Confidential titled Bills, Bonds and even Bigger Debts claiming that Zambia risks losing its sovereignty to China which is bound to seize its national assets once the government defaults on loans.
“A major worry of the IMF and US is that China’s BRI strategy is first to encourage indebtedness, and then to take over strategic national assets when debtors default on repayments. The state electricity company ZESCO is already in talks about a takeover by a Chinese company, AC has learned.
“The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence,” the report read.
The report also indicates that a number of projects in Zambia are financed by China even though the amount of debt has been piling over the years.
Debt trap diplomacy
“Since President Edgar Lungu came to power, Zambia has signed off on at least US$8 billion in Chinese project finance. Over $5 bn. of this has not been added to the total because Zambia insists the money has not been disbursed, and more large loans are in the pipeline,” the report stated.
Zambia is one of the African nations that was in China earlier this week for the China-Africa summit and President Edgar Lungu is reported to have received a grant of $30m for the Lusaka East Multi-facility Economic Zone electrification project.
China has been considered a good partner by many African countries even though there is worry that its loans are burying some of these countries under massive debt.
The East Asian nation has, however, denied engaging in “debt trap” diplomacy adding that it continues lending to Africa on the grounds that the continent still needs debt-funded infrastructure development.