China Development Bank provides $175.92 million loan for Upgrading of Mansa-Luwingu Road Project (Linked to Record ID#53044)

Project narrative

In 2013, China Development Bank (CDB) and the Government of Zambia signed a $175.92 million loan agreement for the Upgrading of Mansa-Luwingu Road Project (captured via Record ID#30719). The precise borrowing terms of this loan are unknown. The proceeds of the loan were to be used by the borrower to finance approximately 85% of the cost of a $206.96 million commercial contract between the Road Development Agency (RDA) of Zambia and China Henan International Cooperation Group Company Ltd., which was signed on December 27, 2012. The Government of Zambia was responsible for providing the remaining $31.04 million via counterpart funding. As of 2014, CDB had disbursed $64.67 million from this loan. The Government of Zambia soon realized it did not have enough tax or non-tax revenue to meet its initial counterpart funding commitment. Therefore, in 2016, CDB issued an additional $29.5 million loan to the Government of Zambia (captured via Record ID#53044). This loan, which is also known as the Mansa-Luwingu Road Project (M3) Amendment, carried the following borrowing terms: a 10-year maturity, a 3-year grace period, a 5.558% interest rate (LIBOR plus 450 basis points), a 0.5% commitment fee, and a 0.5% management fee. The Upgrading of Mansa-Luwingu Road Project had two components: the upgrading of a 175 kilometer M3 road from Mansa to Luwingu and upgrading 30 kilometers of urban roads from Mansa and Luwingu. The purpose of the project was to more effectively connect Mansa province with Luwingu province, and thereby reduce the cost of exporting copper products, agricultural products and other goods. The project was also expected to generate 1,200 jobs and take approximately 40 months to complete. China Henan International Cooperation Group Company Ltd. was the contractor responsible for project implementation. The project was ultimately completed on July 18, 2016.