Backed by the African Development Bank (AfDB), the government is combining a $600 million loan with its own resources to buy back $1.36 billion in expensive sovereign bonds.

The move is intended to ease financial pressure while creating room for investment in electricity infrastructure.

Rather than treating debt and energy challenges separately, Zambia is bringing the two together.

Under the plan, the country has committed up to $275 million over 15 years to a Grid Resilience Programme designed to strengthen and modernize electricity distribution.

The approach comes at a time when many African economies are dealing with rising debt burdens and inadequate power networks.

Zambia and the AfDB believe addressing both issues at the same time could provide lessons for other countries across the continent.

Bondholders are still considering the proposal after Zambia extended the early participation deadline to June 9 and improved the terms of the offer. The final outcome will depend on investor support.

Creating room for power investment

If the transaction succeeds, Zambia could free up resources that would otherwise go toward servicing costly debt.

Those savings would help finance improvements to the country’s electricity network and support broader economic growth.

The Grid Resilience Programme will focus on strengthening distribution infrastructure, reducing losses and improving reliability.

A stronger network would also make it easier to connect new customers and integrate renewable energy projects.

Building resilience against future shortages

Zambia’s power system depends heavily on hydropower, leaving the country vulnerable during periods of drought.

Recent dry conditions have contributed to electricity shortages and highlighted the need for a more flexible system.

A stronger grid could help Zambia manage future supply disruptions through regional power trading, battery storage and distributed renewable energy.

Improved electricity reliability could also help attract new investment across the economy.

GreenCo takes on a broader role

The programme will be coordinated by GreenCo Power Services, part of Africa GreenCo Group, while implementation will be handled by an independent entity managed by private-sector professionals.

For GreenCo, the project marks an expansion beyond its traditional role as a renewable energy trader.

More broadly, the transaction shows how African institutions can use development finance to support both fiscal stability and energy security.

While the initiative will not solve every challenge facing Africa’s power sector, it offers a practical example of how debt management and infrastructure investment can work together.