Zambia's Debt Restructuring Woes: A Feminist Perspective on Economic Hurdles
As Fr. Muyebe aptly put it, "We need to organize and begin to do what we are, and we'll be able to learn from this IMF program."
MAPUTO, Mozambique — Zambia's prolonged debt restructuring, entering its third year, is highlighting how economic crises disproportionately affect women and marginalized groups, writes Winston Mwale.
This revelation emerged Thursday at the 4th African Conference on Debt and Development (AfCoDD IV) in Maputo.
Experts convened to dissect Zambia's struggles through a feminist lens, revealing how gender-sensitive approaches in financial decision-making could reshape the nation's economic future.
The session, titled "Feminist Insights into Zambia's Debt Restructuring Challenges," brought together experts from various sectors to explore how the debt crisis disproportionately impacts women and marginalized groups.
The discussion emphasized the urgent need for gender-sensitive approaches in financial decision-making and debt restructuring processes.
Zambia, which has been embroiled in a protracted debt restructuring process for over three years, served as a case study for the broader African context.
The panel, moderated by Isaac Mwaipopo of the Centre for Trade Policy and Development (CTPD), featured insights from Peter Mumba of the Zambia Debt Alliance, Fr. Alex Muyebe of the Jesuit Centre for Theological Reflection (JCTR), and Edna Zgambo Kanguya from the Parliamentary Budget Office of the National Assembly of Zambia.
Diana Mochonge, Afrodad’s Policy Research & Advocay Officer, also joined the panel.
Fiscal Consolidation: A Double-Edged Sword
Peter Mumba highlighted the challenges Zambia faces in its fiscal consolidation efforts.
"There has been a mismatch in terms of what the government is trying to achieve out of this fiscal consolidation," Mumba explained. He noted that while there have been efforts to reduce expenditure, including canceling non-essential projects and reducing infrastructure spending, the revenue side of the equation remains problematic.
The government's shift towards domestic borrowing and increased reliance on value-added tax (VAT) has raised concerns about the regressive nature of these policies.
"The focus on raising resources domestically has also been a challenge," Mumba stated.
"The push has been towards a value-added tax, which is not very progressive because it doesn't consider the income status or poverty levels in a country."
This approach, according to Mumba, disproportionately affects women and the poor.
The uniform 16% VAT rate applies regardless of income level or location, urban or rural.
"You see that, looking at the demographics again, it disproportionately affects people, especially women," he emphasized.
The Debt Servicing Dilemma
The shift from external to domestic debt has created new challenges.
Mumba pointed out that by 2027, the Zambian government projects to spend around 210 billion kwacha on debt servicing, with 80% of this amount going towards domestic debt interest.
This stands in stark contrast to the projected spending on essential services: approximately 20 billion kwacha for health, 30 billion for education, and similar amounts for social protection, water, and sanitation combined.
"We might find ourselves in a situation where we are just switching variables from external debt to domestic debt," Mumba warned.
"It's like you're in a pool of mud, you pull this right leg out, the left leg is going in. You pull the left leg out, the right leg starts going in."
The Role of International Financial Institutions
Fr. Alex Muyebe emphasized the need for African nations to unite in their approach to debt negotiations.
"I think one of the pillars is developing the new global financial architecture from the African perspective," he stated.
"The borrowers must come together and form a club. It's only at that stage that we will be able to organize ourselves and stand our ground and push back in terms of debt servicing."
Muyebe also highlighted the importance of completing comprehensive debt restructuring, noting that it remains a key benchmark for programs like the IMF's Extended Credit Facility.
With 2025 approaching rapidly, he questioned whether Zambia would meet these benchmarks in time.
"I don't think that we should be asking for an extension," Muyebe asserted. "If anything, I think the conversations right from the onset should have been about what's next after the extended credit facility. We needed to already have an exit plan."
Legislative Reforms and Gender Considerations
Edna Zgambo Kanguya provided insights into Zambia's recent legislative reforms aimed at improving debt management.
The enactment of the Public Debt Management Act in 2022 replaced the outdated Loans and Guarantees Act of 1969, addressing several shortcomings that contributed to the current debt crisis.
Key highlights of the new Act include:
Fiscal rules limiting the debt-to-GDP ratio to 65% and debt service-to-revenue ratio to 20% (effective from 2027).
Introduction of an annual borrowing plan to be presented alongside the national budget.
Enhanced transparency through mandatory publication of a medium-term debt strategy and regular debt bulletins.
Increased parliamentary involvement in debt approval processes.
However, Kanguya noted that the Act does not explicitly mandate gender considerations in borrowing decisions.
"From a feminist perspective, the Act is not gender-focused to the extent that it does not explicitly state that the borrowing or the annual borrowing plan should state how much it's going to impact the gender situation," she explained.
Despite this limitation, Kanguya highlighted how gender considerations can be inferred from the purpose of loans listed in the annual borrowing plan.
She cited examples such as the Zambia Agriculture Business and Trade Project, which aims to enhance the agribusiness sector where women are heavily involved but often receive lower returns due to limited value addition capabilities.
Similarly, the Zambia Education Infrastructure Enhancement Project, while not explicitly gendered, has implications for improving education quality and reducing dropout rates among girls.
Implications for Women and Families
The broader implications of debt management on women and families were a central theme of the discussion.
Kanguya explained how debt servicing costs can lead to constrained government expenditure, often affecting social sectors that disproportionately impact women and girls.
"The social sector is usually the most vulnerable to expenditure cuts," Kanguya noted.
"Obviously, women and girls, the health sector, and education get impacted by such decisions to cut expenditure in order to take care of statutory expenditure."
Moreover, limitations on public sector wage increases due to debt servicing obligations can affect household incomes, exacerbating poverty which, as Kanguya pointed out, "carries a woman face" in the African context.
The composition of debt also has gender implications. Increased domestic borrowing can lead to higher interest rates, making credit less accessible for low-income individuals, small businesses, and farmers – many of whom are women.
"That means that they will not be able to earn income, they can't expand their businesses, and that has a direct implication on families," Kanguya explained.
Regional Perspectives and Best Practices
Mochonge from AfriDAD provided a regional perspective on debt management strategies.
She emphasized the importance of responsible borrowing and lending practices, strong legislation, and citizen participation – especially women's voices – in budget-making processes.
"Countries that are doing well in terms of economic growth ensure that citizens actually participate and engage in those decision-making processes," Mochonge stated.
She highlighted the importance of information sharing and transparency in public finance management, noting that many citizens lack basic knowledge about their country's debt situation.
"How many people here know how much their governments have borrowed, how many people know what those debts go to do, how many people even know who their creditors are?" Mochonge questioned.
She pointed to the Open Budget Survey as a tool for assessing countries' transparency in public finance reporting.
Mochonge also emphasized the role of strong parliamentary oversight, informed legislators, and robust legislation in ensuring responsible borrowing and lending practices.
Additionally, she highlighted the importance of proper natural resource governance, particularly in the mining sector, to ensure that benefits reach communities and protect women's livelihoods.
Looking Ahead
As African nations continue to navigate complex debt landscapes, the insights from this session underscore the critical need for gender-sensitive approaches to economic policy and debt management.
The experiences of Zambia offer valuable lessons for other African countries grappling with similar challenges.
The path forward requires a multifaceted approach: strengthening legislative frameworks, enhancing transparency and citizen participation, prioritizing gender considerations in economic decision-making, and fostering regional cooperation in debt negotiations.
As Fr. Muyebe aptly put it, "We need to organize and begin to do what we are, and we'll be able to learn from this IMF program."
The challenge now lies in translating these insights into actionable policies that promote gender equality, social justice, and economic resilience across the African continent.