Lusaka – U.S. Treasury Secretary Janet Yellen is in Zambia, the second leg of her African tour aimed at boosting U.S. investment and ties, in a capital city that is clearly dominated by the yuan.
Yellen arrived via the refurbished Kenneth Kaunda International Airport, which was expanded with Chinese financing in 2015, and sailed past billboards with Chinese signage and new companies, a sign of Beijing’s influence and growing ties to the United States. Evidence of fierce competition
But the growth the country has experienced has been accompanied by a heavier debt burden. Zambia failed to make a $42.5 million bond payment in November 2020, becoming the first African sovereign to default during the pandemic. Negotiations have been ongoing over how to deal with the debt burden.
How Zambia renegotiates its debt with China will provide a test case of China’s tolerance for other overextended countries facing debt distress.
Debt will be a topic on Monday when Yellen meets Zambia’s president and finance minister to push China to continue talks. She will also tour pharmaceutical plants that have benefited from U.S. investment, demonstrating what she sees as success stories.
“Many African countries are now plagued by mountains of unsustainable debt. That’s definitely a problem. Much of it has to do with Chinese investment in Africa,” Yellen said in an interview with The Associated Press in Senegal on Saturday. This is the first stop of her trip to Africa.
Still, Yellen insisted her visit was not about competing with China.
“We want to deepen our engagement,” she said, “and we see a need for opportunity and economic growth for a rapidly growing young population.”
“We have many government programs and international programs to help build infrastructure,” she said. “When we do that, we want to make sure we’re not creating the same problems that Chinese investment sometimes creates here.”
Yellen said the U.S. wants to invest in companies whose contracts “are transparent, where our projects genuinely deliver broad-based benefits to the people of Africa and do not leave an unsustainable legacy of debt.”
Experts say a prolonged debt crisis could permanently hamper the recovery of countries like Zambia, driving the entire country into the abyss of poverty and unemployment and excluding it from credit for future reconstruction.
To showcase the U.S. efforts, Yellen’s first stop in Zambia was a visit to Mylan Laboratories, a subsidiary of U.S. drugmaker Viatris. Established in 2010 with a $10 million investment, the laboratory manufactures drugs for malaria and HIV in the country and region.
She also plans to stop at Zambia’s National Institute of Public Health, which is considered a model institution of its kind.
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