Active Development AidData Chinese Aid

China Development Bank provides $30 million loan to Development Bank of Zambia (DBZ) for on-lending to SMEs

$30M USD

Funder	China Development Bank (CDB)
Recipient Organization	Development Bank of Zambia (DBZ)
Country	Zambia
Start Date	Oct 16, 2015
End Date	Aug 28, 2029
Duration	5,065 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`52190`

Grant Description

China Development Bank provides $30 million loan to Development Bank of Zambia (DBZ) for on-lending to SMEs On October 16, 2015, China Development Bank (Jiangxi Province Branch) signed a $30 million loan (credit line) agreement with the Development Bank of Zambia (DBZ) for on-lending to support small and medium enterprises (SMEs) in Zambia.

📋 Loan / Grant Terms

💰 Loan Amountcarries the following borrowing terms: an 9-year maturity

📅 Maturity9 years

⏳ Grace Period0.5833 years

It is backed by a sovereign guarantee and collateralized against a $6 million cash deposit (worth 20% of the total face value of the loan) in an escrow account.

The loan’s (principal) amount outstanding was $20 million as of September 2017, $27,500,000 as of December 2020, $27,000,000 as of June 2021, $22,500,00 as of June 2022, and $18,000,000 as of December 2022.

The loan proceeds were expected to benefit at least 50 enterprises in the agricultural manufacturing and mining sectors.

📋 Staff Comments

This loan was part of the CDB’s Special Loan for the Development of African SMEs Program (非洲中小企业发展专项贷款), which was established in 2009.
Different sources report different borrowing terms. Several media sources (e.g. source ID 116401) report a 5.5% interest rate. A 2017 World Bank report claims that the loan carried an interest rate of LIBOR pus a 3% margin and 10-year maturity. For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details. For this record, AidData relies on the DBZ 2016 Annual Report, which indicates that the loan carries an 8-year maturity and an interest rate of 6-month LIBOR plus a 3% margin (see p. 56).
This line of credit is not marked as an umbrella since it is for a specific on-lending arrangement, so there is no risk of double-counting.
A Bank of Zambia (source ID 116404) publication notes that the loan is collateralized against a $6 million cash deposit (worth 20% of the total face value of the loan) in an escrow account.
The (principal) amounts outstanding are drawn from https://www.dropbox.com/s/cxxwuphrdzdp1h1/End%20December%202022%20-%20Public%20Debt%20Summary%20%281%29.pdf?dl=0 and https://www.dropbox.com/s/ni66tezfcgcctlc/End%20June%202021%20-%20Public%20Debt%20Summary.pdf?dl=0 and https://www.dropbox.com/s/6afvt22klw6120p/End%20June%202022%20-%20Public%20Debt%20Summary.pdf?dl=0 and https://web.archive.org/web/20210606223325/https://mof.gov.zm/?wpfb_dl=3526. According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending (worth $30 million) from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 0.5833-years in 2015. AidData estimates the grace period of the CDB loan that DBZ by using this figure. See https://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=0 7. According to the World Bank's Debtor Reporting System (DRS), the weighted maturity of all ‘private’ sector lending (worth $30 million) from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 9-years in 2015. AidData estimates the maturity of the CDB loan that DBZ by using this figure. See https://www.dropbox.com/scl/fi/7s83xx6ewetbxgoffwsi9/DRS-December-2023-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=386ro4mctbkxdv3wsg51cp6rs&dl=0

📚 Sources & References

China,Zambia : CHINA DEVELOPMENT BANK
ZAMBIA sign $30 million loan deal to improve SMEs
China,Zambia : ZAMBIA: DBZ sources funds from CHINA to support SME Growth
杨优明大使出席国开行与赞开发银行贷款签约仪式
驻赞比亚大使杨优明出席国开行与赞开发银行贷款签约仪式
Chinese bank offers Zambia 30 mln USD loan to develop small and medium enterprises
Development Bank of Zambia 2015 Report
Development Bank of Zambia 2016 Report
Ambassador Yang Youming Attends the Signing Ceremony of the Loan Contract between China Development Bank and Development Bank of Zambia
Zambian Bank Awarded With USD 30 Million By China Development Bank To Boost Lending To SMEs
Chinese bank offers Zambia $30 m loan to develop SMEs
DBZ in $30m China bank loan
INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 19.4 MILLION (US$26.5 MILLION EQUIVALENT) TO THE REPUBLIC OF ZAMBIA FOR AN ELECTRICITY SERVICE ACCESS PROJECT
ANNEX IV: BANKING IN THE REPUBLIC OF ZAMBIA
REPORT OF THE COMMITTEE ON DELEGATED LEGISLATION FOR THE FIFTH SESSION OF THE ELEVENTH NATIONAL ASSEMBLY APPOINTED ON WEDNESDAY, 23RD SEPTEMBER, 2015
End June 202021 Public Debt Summary
End June 2022 Public Debt Summary
End December 2022 2 Public Debt Summary, government debt portfolio review
Statutory Instrument 100 of 2015 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.