[Cancelled} China Eximbank cancelled $135.05 million for $204.94 million loan for Phase 3 of Lusaka Urban Roads (L400) Upgrade Project (Linked to Record ID#57194, #57218 #31329 and #57190)

📋 Staff Comments

1. SAIS-CARI identifies China Jiangxi Corporation for International Economic and Technical Cooperation (CJIC) as the contractor responsible for implementation. However, multiple official sources (including MOFCOM and HOEC) identify AVIC and HOEC as the contractors responsible for implementation.
2. In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI records Bank of China rather than ICBC as the source of the $36 million loan for Phase 3. AidData records ICBC as the source of the loan because Chief Government Spokesperson Dora Siliya explicitly identified ICBC as the lender in a 2018 public announcement.
3. In 2013, China Eximbank provided a loan for Phase 1 of the L400 Project (captured via Project ID#31329). In 2016, China Eximbank provided a loan for Phase 2 of the L400 Project (captured via Project ID#57218).
4. This project is also known as the Lusaka Urban Road (L400) Upgrade, 400 km, Phase III Project. The Chinese project title is 卢萨卡城市交通系统升级改造(L400)项目三期 or 赞比亚L400市政道路升级改造三期项目.
5. Zambia’s Ministry of Finance identifies the name of the project supported by this loan as ‘REHAB OF URBAN RDS PHASE III’.
6. The entire L400 project involves the construction of 408 kilometers of road, one grade-separated junction, and 90 kilometers of walkways, as well as the re-engineering 10 junctions in the capital city and province of Lusaka. Phase 2 and Phase 3 of the L400 project appear to have some overlap, including in the rehabilitation of Lumumba road, which is quoted by Zambia's Road Development Agency (RDA) as being included in Phase 2 construction, but appears to have been financed with the $241 million used in Phase 3.
7. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all official sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 3.4733-years in 2018. AidData estimates the grace period of the CDB loan that supported Phase 3 of the Lusaka Urban Roads (L400) Upgrade Project by using this figure. See https://www.dropbox.com/scl/fi/uyz6w7q31x2o8i6rna7ug/DRS-May-2024-Extraction-Official-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=n0a6270w91pdmmfyaoqva419r&dl=0 8. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all official sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 12.8605-years in 2018. AidData estimates the maturity of the CDB loan that supported Phase 3 of the Lusaka Urban Roads (L400) Upgrade Project by using this figure. See https://www.dropbox.com/scl/fi/uyz6w7q31x2o8i6rna7ug/DRS-May-2024-Extraction-Official-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=n0a6270w91pdmmfyaoqva419r&dl=0 9. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all official sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 5.728% in 2018. AidData estimates the interest rate of the CDB loan that supported Phase 3 of the Lusaka Urban Roads (L400) Upgrade Project by using this figure. See https://www.dropbox.com/scl/fi/uyz6w7q31x2o8i6rna7ug/DRS-May-2024-Extraction-Official-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=n0a6270w91pdmmfyaoqva419r&dl=010. On July 2022, Zambia announced that it is cancelling certain projects in their entirety or cancelling undisbursed portions of certain Chinese loans unilaterally. 11 China Exim bank projects are cancelled, 3 ICBC projects are cancelled, 1 Jiangxi Bank project is cancelled. While it is unclear if the creditors agreed to this action, there is some evidence that shows the cancellation had ocurred. This issue warrants more investigation. The announcement can be accessed at https://www.dropbox.com/scl/fi/bxixfu3t97x14epaqayjv/MEASURES-TAKEN-REGARDING-SOME-LOAN-FINANCED-PROJECTS.pdf?rlkey=azvseog366a7ntoo93fjiatrj&e=3&dl=0

📚 Sources & References

• Govt gets $470m loan from China for Lusaka
• CB roads
• Leveraging Chinese FDI For Diversified Growth In Zambia
• RDA starts phase 2 Lusaka roads rehabilitation, 2018 Mid-Year Economic Review, 2020 Road Sector Annual Work Plan
• RDA explains Lumumba road project by AVIC
• The decisions of Cabinet at its 3rd sitting on Monday 19th February, 2018
• Govt gets $470m loan from China for Lusaka
• CB roads, 2018 Road Sector Annual Work Plan
• SAIS-CARI Loans China
• 中国对外承包工程国别（地区）市场报告 2019-2020
• REPORT OF THE COMMITTEE ON GOVERNMENT ASSURANCES FOR THE FOURTH SESSION OF THE TWELFTH NATIONAL ASSEMBLY
• L400 To Open Chongwe Market
• Government borrowed US$2.6 billion last year despite debt pile up, 2018 Annual Economic Report
• Siliya unveils Cabinet resolutions on Infrastructure
• NPA
• AIDS
• Medical Stores
• Zambia’s Chinese Debt in the Pandemic Era - Briefing Paper
• Govt gets 470m loan from china for lusaka cbroads
• 中国对外承包工程国别（地区）市场报告2019-2020.pdf
• Report of the Expanded Budget Committee on the Estimates of Revenue and Expenditure for the Year 1st January to 31st December 2020, 2018 ANNUAL PROGRESS REPORT SEVENTH NATIONAL DEVELOPMENT PLAN (7NDP: 2017-2021)
• MEASURES TAKEN BY THE GOVERNMENT ON THE IMPLEMENTATION OF LOAN FINANCED PROJECTS
• Annual Economic Report 2018
• Dipak drags Minister of Finance to court for contracting loans without parliament approval
• China Eximbank Loans to Zambia 2018 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.