Zambia
Copper dependency since 1920s colonial mining drove 2020 default; G20 Common Framework restructuring finally completed 2024 after three years of negotiations with China and bondholders.
Zambia pioneered a new approach to sovereign debt restructuring—becoming the first country to test the G20's Common Framework for debt resolution—and the painful process may finally be reaching completion, offering a template for other distressed debtors or a cautionary tale about the costs of delay.
The Copperbelt that spans Zambia's northern border with the Democratic Republic of Congo has defined the nation's economy since commercial mining began in the 1920s. Northern Rhodesia, as the British colony was called, existed primarily to extract copper for global markets. Independence in 1964 under Kenneth Kaunda brought nationalization of the mines and ambitious development plans funded by copper revenues.
The copper price collapse of the mid-1970s exposed the vulnerability of dependence on a single commodity. Prices that had sustained the post-independence boom fell by more than half and stayed depressed for decades. Zambia's per-capita income, which had been among Africa's highest at independence, declined continuously for twenty years.
Privatization in the 1990s transferred the mines to foreign ownership but didn't resolve the fundamental challenge: copper prices determine national prosperity, and Zambia cannot control copper prices. The boom of the 2000s brought growth; the 2015 price decline brought crisis again. Government spending, financed by borrowing during good times, created debt burdens that falling revenues couldn't service.
The default came in November 2020, when Zambia became the first African country to default on its sovereign debt during the COVID pandemic. What followed was three years of negotiations with creditors—China (holding roughly a third of external debt), bondholders, and bilateral lenders—under the G20 Common Framework designed to coordinate restructuring for poor countries.
The negotiations proved excruciating. Creditor coordination failed repeatedly. China's opacity about its lending terms complicated calculations. Bondholders resisted haircuts. The IMF program required reforms that conditioned further support on restructuring completion. Only in 2024 did bondholders and bilateral creditors reach agreement, reducing debt service by roughly $1 billion.
Today, copper prices have recovered, providing revenue relief. The economy is growing again. The restructuring template—imperfect, slow, but ultimately functional—may help future debtors navigate similar crises.
By 2026, Zambia must demonstrate that restructuring enables sustainable development, not merely postponement of the next crisis. Copper dependency remains; the mines remain under foreign ownership; the structural vulnerabilities remain. What's changed is the debt burden—for now.