In a pioneering development financing approach, the Zambian government repurchased US$1.36 billion of sovereign Eurobonds by combining its own resources with a US$600 million loan from the African Development Bank Group.
The African Development Bank (AfDB) has received significant support from the credit insurance market, including Atrium Underwriters, Canopius Manufacturing Agents, Chaucer Group, MS Amlin, Mosaic Insurance, MSIG USA, Liberty Specialty Markets, Brit Insurance, The Hartford, Mitsui Sumitomo Insurance Company (Europe) Ltd. and The Texel Group.
This landmark debt-for-energy deal enables the Zambian government to redirect $275 million in debt service savings towards investment in the country’s energy sector, demonstrating an innovative strategy that other African countries can emulate to unlock development finance.
Zambia’s bond buybacks illustrate the impact of public-private partnerships in development finance. By leveraging private credit insurance, the African Development Bank mobilized risk-taking capital for the package to enhance Zambia’s debt sustainability and unlock investment in critical energy infrastructure.
This transaction highlights the role of private insurance as a powerful development catalyst, allowing the African Development Bank to advance its mobilization mandate by engaging the private sector, expanding its balance sheet and delivering greater development impact across member countries across the region.
Hassatou Diop N’Sele, AfDB Group Vice President for Finance and Chief Financial Officer, said: “The African Development Bank remains committed to supporting Zambia’s energy sector as a key driver of economic transformation. Our current and past investments are focused on strengthening energy security, expanding transmission infrastructure and promoting renewable energy solutions to build resilience and achieve sustainable growth.”
Daniel Riordan, Senior Vice President and Head of Political Risk, Credit and Guarantees at MSIG USA, commented: “Our mission is to contribute to building a more vibrant society and help secure a bright future for our planet. MSIG USA is proud to support this important transaction, which will contribute to Zambia’s sustainable development while demonstrating the important role private insurance companies play in mobilizing global development finance.”
For the insurance market, the transaction highlights the increasingly important role that private venture capital can play in addressing development financing challenges.
By partnering with the African Development Bank and providing tailored credit insurance capabilities, the insurer is helping to free up financing that might otherwise be restricted, demonstrating how private sector expertise and balance sheets can be mobilized to support the SDGs.
Texel Director Shahin Samiy said: “We are proud to support the African Development Bank in executing this important transaction, which underlines the bank’s leadership in advancing innovative and impactful financial solutions across the continent. This successful bond buyback highlights Zambia’s commitment to prudent and forward-looking debt liability management, while demonstrating the African Development Bank’s critical role in enhancing market confidence and achieving sustainable outcomes for its member countries.”
“We also recognize the constructive engagement and collaboration of the insurance market in navigating the complexities of the transaction. As a broker with the African Development Bank, we are honored to contribute to an initiative that ultimately supports Zambia’s long-term economic resilience and development.”
