(Bloomberg) -- Zambia is close to reaching debt restructuring deals with some of its remaining commercial creditors following agreements with official lenders and bondholders, said Felix Nkulukusa, secretary to the Treasury.

Africa’s second-biggest copper producer — which in 2020 became the continent’s first pandemic-era defaulter — has so far struck deals to revamp $10.1 billion of its liabilities, with $3.3 billion remaining, he said Wednesday in a speech in Lusaka, the capital. About $1.9 billion of that is held by Chinese lenders, Bloomberg reported March 27, citing a person familiar with the matter.

“We have already started negotiating,” Nkulukusa said. “With some, we are almost reaching there. With others, we still have more discussions to be undertaken.”

Common Framework

Zambia began the restructuring process in February 2021 under the Group of 20’s Common Framework. The mechanism, which has been widely criticized for being too slow, seeks to bring the traditional Paris Club group of national lenders around the table with large sovereign creditors including China and India. 

The approach also requires that poor countries asking for debt relief must seek comparable treatment from private creditors, such as bondholders and commercial banks, as they get from the official lenders.

The process for Zambia has dragged on painfully and suffered many setbacks. President Hakainde Hichilema has called his country a “guinea pig” for the Common Framework, as it pioneers the path to reaching separate deals with each creditor group that are acceptable to the other lenders.

The agreements reached with its official creditor committee last year and bondholders in March, were “huge steps forward and a success for Zambia and it’s creditors, but also for all highly indebted countries and the world,” World Bank Country Manager Achim Fock said in speech at the same event.

“We now look forward to agreement also between Zambia and its other private creditors and would like to encourage all stakeholders to accelerate those negotiations as well,” he said.

State-owned Chinese lenders including Industrial & Commercial Bank of China Ltd. and China Development Bank are among those Zambia still needs to strike deals with. Nkulukusa visited the Asian nation earlier this year to share proposals under non-disclosure agreements.

“The processes are going on well and we are hopeful that with the bondholders agreement, that these others will fall in place,” he said.

Other major commercial creditors that Zambia needs to reach restructuring deals with include Investec Plc, Israel Discount Bank Ltd. and Standard Chartered Plc, with those three together accounting for more than $1 billion. 

While the government has signed a memorandum of understanding with its official creditor committee to restructure $6.3 billion in debt, it still needs to sign bilateral deals with each of the group’s members before it starts servicing the new loans.

Also at the event, Finance Minister Situmbeko Musokotwane said Zambia will hit its target of ramping up copper production to 3 million tons yearly in 10 years from now, later than a previous plan of by 2031. The nation’s large-scale mines produced 698,566 tons last year. 

“There is no doubt in my mind whatsoever that that three millions tons of copper, we are going to hit that target,” he said. “Perhaps we may be late by a year or two. And that’s when you see the game changing.”

©2024 Bloomberg L.P.