The Zambian government has announced that it has secured near-unanimous backing from bondholders for a $1.36 billion debt buyback deal designed to improve the country’s fiscal position while investing in its power infrastructure.
According to a statement released on Wednesday, investors holding 97.85% of the outstanding principal value of a soon-to-mature 2053 sovereign bond have agreed to participate in the transaction.
The arrangement forms part of Zambia’s broader debt restructuring efforts following its default in the aftermath of the COVID-19 pandemic.
The country is financing the buyback using a $600 million loan from the African Development Bank, along with additional domestic resources.
In exchange for the debt restructuring, the government has committed to investing up to $275 million over a 15-year period to modernise and expand its national electricity grid.
Officials describe the initiative as a pioneering “debt-for-development swap” focused specifically on the energy sector, and potentially the first of its kind globally.
The government had earlier sweetened the offer with an additional $65 million incentive to encourage bondholder participation.
Authorities confirmed that the overwhelming level of acceptance now clears the way for implementation of the agreement.
Zambia has spent more than two years negotiating the structure of the deal as part of its efforts to restore debt sustainability and attract long-term investment.
The country remains one of several African economies that have faced debt distress in recent years, driven by external shocks and rising borrowing costs.
Despite progress in restructuring, significant development challenges remain. According to national statistics, nearly half of Zambia’s 22 million citizens still lack access to electricity.
Officials say the debt-for-development swap is expected to help close this gap by strengthening energy infrastructure and improving nationwide access to power.
The government argues that linking debt relief with targeted development investment can create more sustainable outcomes than traditional restructuring approaches.
If successfully implemented, the arrangement could serve as a model for other developing countries seeking innovative ways to manage debt while financing critical infrastructure.
