Completed Development AidData Chinese Aid

[Disbursed] ICBC disbursed $268.96 million for $274.61 million loan for 2350-Unit Police and Security Force Housing Project (Linked to Record ID#107880)

$268.96M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Government of Zambia
Country	Zambia
Start Date	Jan 01, 2016
End Date	Mar 24, 2029
Duration	4,831 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`52198`

Grant Description

[Disbursed] ICBC disbursed $268.96 million for $274.61 million loan for 2350-Unit Police and Security Force Housing Project In January 2016, the Government of Zambia and the Industrial and Commercial Bank of China (ICBC) signed a $274,612,768.07 loan agreement for the 2350-Unit Police and Security Force Housing Project.

The proceeds of the loan were to be used by the borrower to finance 85% of the cost of a $323,073,844.79, three-year commercial (EPC) contract between the Government of Zambia's Ministry of Home Affairs and AVIC International, which was signed in December 2014. The Government of Zambia was responsible for directly financing the remainder (15%) of the project cost.

As of July 2022, the ICBC loan had achieved a 97.9% disbursement rate ($268,959,363.78 out of $274,612,768.07).

The purpose of the project was to construct 2,350 housing units for members of Zambia's Ministry of Home Affairs: Zambia Police Service, Zambia Correctional Services, the Immigration Department, and the Drug Enforcement Commission. These housing units included 997 low-cost units, 1,238 medium-cost units, and 115 high-cost units.

AVIC International and China 15th Metallurgical Construction Group Co. Ltd. were the contractors responsible for project implementation. The project was implemented in two phases.

Phase 1 was made up of four sites: Chelston in Lusaka (48 houses); Silverest in Lusaka, Chongwe area (41 houses); Kawama in Kitwe (24 houses); and Mukobeko in Kabwe (42 houses). Phase 1 officially launched on October 27, 2015, but Phase 1 construction did not begin until July 7, 2017. Phase 2 construction activities ended on June 20, 2020.

On July 29, 2022, the Ministry of Finance & National Planning (MOFNP) of Zambia announced that it was seeking lender approval to formally cancel the ICBC loan’s undisbursed balance ($5,653,404.29); however, it also noted that it had not yet secured formal lender approval for this action.

This announcement came approximately 21 months after the Government of Zambia defaulted on its repayment obligations to Eurobond holders and approximately 6 weeks after China, France, and 14 other countries formed a creditor committee to discuss the Zambian authorities’ request for a debt treatment under ‘the Common Framework for Debt Treatment beyond the DSSI’ endorsed by the G20 and the Paris Club.

📋 Staff Comments

This project is also known as the Police and Security Housing Project and the Security Wing Project. The Chinese project title is 赞比亚保障房项目 or 赞比亚干警住宅项目 or 中航国际内政部保障房 or 赞比亚内政部预制保障房项目.
In the database of Chinese loan commitments that it released in July 2020, SAIS-CARI identifies this loan as a $275 million syndicated loan supported by ICBC, China CITIC Bank, and Bank of Jiangsu.
According to the World Bank's Debtor Reporting System (DRS), the weighted average grace period of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 3.7841-years in 2016. AidData estimates the grace period of the ICBC loan that supported the 2350-Unit Police and Security Force Housing Project 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 4. According to the World Bank's Debtor Reporting System (DRS), the weighted average maturity of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 16.2602-years in 2016. AidData estimates the maturity of the ICBC loan that supported the 2350-Unit Police and Security Force Housing Project by using this figure. See hxttps://www.dropbox.com/scl/fi/iymnqwd205mvs5h8crtv8/DRS-May-2024-Extraction-Private-Chinese-Loan-Commitments-to-Zambia.xlsx?rlkey=bi71wlqbrbnfienx75a7bq1g2&dl=05. According to the World Bank's Debtor Reporting System (DRS), the weighted average interest rate of all ‘private’ sector lending from all Chinese creditors to government and government-guaranteed borrowing institutions in Zambia was 4.2599% in 2016. AidData estimates the interest rate of the ICBC loan that supported the 2350-Unit Police and Security Force Housing Project 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=06.In 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

Zambia cabinet approves $275 million Chinese housing loan
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Zambia to contract 275 mln USD loan from China for construction of police houses
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Completed Projects
Ambassador Li Jie attended the handover ceremony of the affordable housing project of the Ministry of the Interior of AVIC
赞比亚总统埃德加.伦古出席中国十五冶承建的保障房项目45#地块移交剪彩仪式
赞比亚总统伦古出席中国十五冶承建的赞比亚保障房项目移交剪彩仪式
赞比亚干警住宅项目已获得审批
赞比亚总统伦古出席中国十五冶承建的赞比亚保障房项目移交剪彩仪式
Ambassador Li Jie Attends the Handover Ceremony of Housing Units for Security Wing Project
SPEECH TO BE DELIVERED BY HIS EXCELLENCY
MR EDGAR CHAGWA LUNGU
PRESIDENT OF THE REPUBLIC OF ZAMBIA AT THE COMMISSIONING AND HANDOVER CEREMONY OF 38 HOUSING UNITS TO THE ZAMBIA POLICE SERVICE
CHIBOMBO DISTRICT
CENTRAL PROVINCE ON SUNDAY, 23RD JUNE, 2019
President Lungu commissions 38 Housing Units for the Zambia Police Service
Speech at the Commissioning and Handing over of Para Military Police Housing Units in Lilayi
Chinese firm hands over 2,000 housing units in Zambia
Ambassador Li Jie Attends the Handover Ceremony of Police Housing Units Project
Chinese firm hands over 2,000 housing units in Zambia
Lungu hands over 82 houses to the Lilayi Paramilitary Battalion
AVIC Completes Luanshya Police Houses
ANNUAL ECONOMIC REPORT 2016
中航国际向赞比亚交付首批保障房, 020_CAHF Yearbook
Zambia Police Official Website
AVIC INTERNATIONAL Delivers the First Social Housing to Zambia
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MEASURES TAKEN BY THE GOVERNMENT ON THE IMPLEMENTATION OF LOAN FINANCED PROJECTS 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.