Yellen calls for debt renegotiations between Zambia and China
U.S. Treasury Secretary Janet Yellen, who is touring African countries this week, says it is crucial to tackle Zambia鈥檚 debt crisis. Ms. Yellen is seeking to encourage fair American investment in a country predominantly financed by China.
U.S. Treasury Secretary Janet Yellen, who is touring African countries this week, says it is crucial to tackle Zambia鈥檚 debt crisis. Ms. Yellen is seeking to encourage fair American investment in a country predominantly financed by China.
U.S. Treasury Secretary Janet Yellen, on the second leg of an African tour aimed at promoting American investment and ties, said on Monday it鈥檚 crucial to immediately address Zambia鈥檚 heavy debt burden with China.
Ms. Yellen was in Lusaka, a capital city that鈥檚 visibly dominated by Chinese financing. Visitors to Lusaka arriving at the renovated Kenneth Kaunda International Airport see a facility expanded in 2015 with Chinese money. A ride into the city passes billboards and newly built firms bearing Chinese signage, more evidence of Beijing鈥檚 influence and increasing competition with the United States.
But the growth that the country has experienced has come with a heavier debt burden. Zambia became Africa鈥檚 first coronavirus pandemic-era sovereign nation to default when it failed to make a $42.5 million bond payment in November 2020. Negotiations over how to deal with the debt load have been ongoing.
Experts say a prolonged debt crisis could permanently prevent countries like Zambia from recovering, leading to an entire nation sliding deeper into poverty and joblessness and excluding it from credit to rebuild in the future. 鈥淚t鈥檚 critically important to address it right away,鈥� Ms. Yellen told reporters at a Monday morning press conference at Zambia鈥檚 National Public Health Institute.
How Zambia鈥檚 debt is renegotiated with the Chinese 鈥� and how quickly 鈥� will provide a test case for how lenient China will be with other overextended nations that face debt distress.
On Monday, Ms. Yellen said that while she had 鈥渃onstructive鈥� conversations with her Chinese counterpart on Zambia鈥檚 debt in Switzerland during a first face-to-face meeting last week, 鈥渋t鈥檚 taken far too long already to resolve this matter.鈥�
Addressing Zambia鈥檚 debt is a primary reason for Ms. Yellen鈥檚 visit, and the Treasury secretary will meet with Zambia鈥檚 president and finance minister later Monday to push for the Chinese to continue negotiations.
Yusuf Dodia, an economist and director of Action Group Zambia, told The Associated Press that while analysts say Zambia shouldn鈥檛 take on any more debt, 鈥渢here are infrastructure projects that we need to do to change the trajectory of the Zambian economy.鈥�
鈥淚f we had a widespread railway system, that would ensure that the cost of transport in Zambia would be brought down to 15% of the current cost 鈥� right now we鈥檙e dependent on busing and trucking 鈥� that would lower the cost of doing business.鈥�
Also Monday, Ms. Yellen toured Mylan Laboratories, a packaging subsidiary of American pharmaceutical manufacturer Viatris. The lab opened in 2010 with a $10 million U.S. investment and packages drugs that treat malaria and HIV in the country and region.
Still, Ms. Yellen insists her trip is not about competition with China.
鈥淲e want to deepen our engagement,鈥� she said 鈥淲e see a rapidly growing young population that needs opportunities and economic growth.鈥�
鈥淲e have many government programs and international programs that are oriented to help efforts to build infrastructure,鈥� she said. 鈥淎nd when we do that, we want to make sure that we don鈥檛 create the same problems that Chinese investment has sometimes created here.鈥�
Ms. Yellen said the U.S. wants to invest in companies with contracts that 鈥渉ave transparency, that we have projects that really bring broad-based benefits to the African people and don鈥檛 leave a legacy of unsustainable debt.鈥�
She also made a stop at the Zambia National Public Health Institute, considered a model of its kind.
Ms. Yellen started her 10-day African trip in Senegal, where she visited a one-time slave-trading post, and will visit South Africa.
The Biden administration鈥檚 tour of Africa continues, as the U.S. ambassador to the United Nations, Linda Thomas-Greenfield, announced that she would be the second Cabinet member heading to Africa 鈥� to Ghana, Mozambique, and Kenya starting Jan. 25 鈥� as part of President Joe Biden鈥檚 big push to engage with the world鈥檚 second-largest continent.
In December, the White House announced the Democratic administration鈥檚 support for the African Union becoming a permanent member of the Group of 20 nations.
This story was reported by The Associated Press