Zambia turned to the World Bank for increased development finance, saying foreign aid and domestic funding was not enough to build the infrastructure needed to underpin economic growth in Africa’s biggest copper producer.
“Zambia has a huge resource gap and the World Bank has been one critical institution helping us to reduce this resource gap,” newly appointed finance minister Alexander Chikwanda told a meeting of World Bank officials.
“We have to borrow at an increased pace and rate to keep Zambia developing.”
Even though its economy has been bowling along at 6 percent or more annual growth, dilapidated roads prevent many of Zambia’s 13 million people from feeling the benefits, while power shortages are hampering investment in the mining sector, Reuters reports.
Since his election a month ago, President Michael Sata has announced plans to build several rural roads and upgrade others, while Chikwanda said a “lot of investment” was needed in the energy sector as a basis for wider growth.
“We have to borrow because we cannot sustain development from internally generated resources. We need a lot of investment in the energy sector to sustain growth in other sectors,” he said.
Historically, foreign aid has accounted for 10 percent of Zambia’s budget although fiscal crises in European donor nations suggest this cannot last. As a result, Chikwanda said Zambia needed to cut its reliance on “external charity”.
Before the election, then-president Rupiah Banda’s administration was lining up a debut $500 million eurobond to cash in on investors’ appetite for high-yielding frontier market debt, although analysts said it was unlikely to have gone through given Europe’s financial mess.
Chikwanda made no mention of the eurobond plans, suggesting they have been shelved.
World Bank regional head Hassan Ahmed Taha told the same meeting the Washington-based institution was very open to lending to Zambia.