Lusaka, Zambia — Zambia has opened preliminary talks with China on a yuan-kwacha swap that would let future payments to Beijing be settled in local currency instead of U. S. Dollars, according to local reports.
Officials say the step is meant to trim foreign — exchange risk at a time when the kwacha has lost roughly 30 % of its value against the dollar since 2021, raising the local-currency cost of external debt service. China is Zambia’s largest bilateral creditor, holding about one-third of its roughly 13 billion USD external debt.
The proposed arrangement would cover routine remittances such as mining royalties and tax transfers, but no size, tenor or start date has been set.
Sources close to the matter describe the discussions as “early-stage” and note that Chinese authorities have not yet issued a formal response. Zambia became the first African sovereign to default during the pandemic in November 2020 and remains in protracted negotiations under the G-20 Common Framework.
While a handful of bilateral restructuring agreements with Chinese lenders were signed in October 2025, the overall process is still unfinished.
World Bank data show more than 70 % of Zambia’s public external debt is denominated in dollars, so a bilateral swap would only marginally alter total currency exposure unless similar deals are reached with other creditors.
The Bank’s June 2024 report lists China Exim Bank and China Development Bank as the main holders of Chinese claims. Civil-society groups quoted in United Nations Digital Library papers caution that side arrangements outside the Common Framework could weaken unified creditor bargaining and might prioritise Chinese claims over social spending.
Government statements so far portray the swap as a technical cash — management tool rather than a fresh debt write-off.
Further details are expected once both sides complete internal reviews.
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Source: Africa.
*Additional reporting by ImNews | Sources consulted: 4*
