How Zambia and China Co-Created a Debt ‘Tragedy of the Commons’

Image: Flickr, Wu Zhiyi
Image: Flickr, Wu Zhiyi

In November 2020, Zambia became the first African country to default on its Eurobonds during the COVID-19 pandemic.

The China Africa Research Initiative (CARI) estimates that the Zambian central government and its state-owned enterprises owe Chinese lenders at least US$ 6.6 billion. Although Zambia’s debt problems predated the pandemic by a large margin, the country is an important case for understanding the Chinese role in the rise of debt distress in the new millennium. Given the many rumors about Chinese ‘debt traps,’ it is important to emphasize that Zambia is an outlier when it comes to the weight of Chinese loans. CARI estimated that Zambia’s loan commitments to all Chinese creditors at the end of 2019 was close to 43 percent of 2019’s gross national income (GNI). The average for Africa was 10 percent (all data refers to the African continent).

1 Jan 2021