EU bank gives money, lifts restrictions on Zambia due to Sata’s anti-corruption statements

The European Investment Bank [EIB] has lifted restrictions on its activities in Zambia in recognition of the anti-corruption pronouncements by President Michael Sata.

Minisster of Finance spokeperson Chileshe Kandeta also revealed to the Watchdog that Zambia and the European Investment Bank have now signed a EURO80 Million financing contract for rehabilitation of the Great East Road.

The European Investment Bank imposed the restrictions following concerns raised in 2009 by the Bank’s Inspector General, regarding governance matters involving ZESCO.

The governance concerns boarded on matters related to three power projects, which the EIB co-financed in the past. These are Victoria Falls, Kariba North Bank and Kariba North Bank II Power Projects.

In a letter to the Minister of Finance and National Planning Alexander Chikwanda, European Investment Bank President Philippe Maystadt said:

“We are pleased to note the public statements by President Sata and his Government, declaring the fight against corruption a key priority. In view of these developments, I am pleased to inform you that the European Investment Bank has decided to lift restrictions on EIB’s activities in the public sector in Zambia.”

“We are also pleased with the numerous institutional changes aimed at strengthening corporate governance; including the changes in leadership at both ZESCO and the Anti-Corruption Commission.”

“We now propose to sign the European Investment Bank Finance Contract for the Great East Road Rehabilitation Project. We have also submitted the loan proposal for the Power Transmission Line for the Kafue-Livingstone to the European Investment Bank Board of Directors.”

Mr. Maystadt also disclosed that a third public sector operation, involving a US$64 Million Ioan for the Itezhi-Tezhi Power Project, was under preparation for submission to the European Investment Bank Governing Board, within December 2011. The estimated total cost of the Itezhi-Tezhi Power Project is US$133 Million. The prospective co-financiers for project are the African Development Bank and the Development Bank ofFrance.

According Mr. Maystardt’s letter, the European Investment will soon be submitting a proposal to its Board of Directors for a US$30 Million Loan for the Kafue-Livingstone Power Transmission Line. This is also in recognition of the substantial efforts made by the Zambian Government to strengthen public service governance.

The estimated cost of the Kafue-Livingstone Transmission Line currently stands at US$103 Million. The project aims to address power supply challenges in Livingstone and to facilitate transmission of Thermal Power from Maamba into the National Grid.


Commenting on the matter, Mr. Chikwanda said the Zambian Government was hopeful that the other prospective co-financiers of the project, namely, the World Bank and the African Development Bank, would move expeditiously to ensure that the Kafue-Livingstone Transmission Line project progressed smoothly.


During the past week, the Government of theRepublicofZambiaand the European Investment Bank signed a EURO80 Million financing contract for rehabilitation of theGreat East Road.

Minister Alexander Chikwanda signed on behalf of the Republic of Zambia while Mr. M. Leistner, Deputy Head of Division [Southern Africa and Indian Ocean], and Mr. P.H Chamberlain, Associate Director, Legal Directorate, represented European Investment Bank.

The estimated cost of the Great East Road Rehabilitation Project is EURO246 Million. The prospective co-financiers of the project, with whom Zambia is yet to sign agreements, are the African Development Bank [EURO78.4 Million], French Agency for Development [EURO49.2 Million],European Development Fund [EURO38 Million], and the European-Union Africa Infrastructure Trust Fund [EURO1 Million].

Speaking to representatives of the European Development Bank at his office, Finance and National Planning Minister Alexander Chikwanda said the Zambian Government was irrevocably committed to the principles of good governance and strict fiscal compliance in the utilisation of both locally and externally mobilised resources.

“We have put measures in place to ensure that, without exception, all public works and services shall be procured through the Zambia Public Procurement Authority. In this regard, I will not tolerate any departure from this requirement. To this effect, any public officer, either in Government or any other public institution or state-owned-enterprise who perpetrates acts of impropriety, misuse of resources, and disregard of procurement guidelines and procedures will have to face the full force of established laws”, said Mr. Chikwanda.

This is not a threat but an act of conviction in which we will fully support the President [Michael Chilufya Sata] in his crusade to root out corruption in Zambia, assured Mr. Chikwanda.

The Minister expressed his gratitude to the European Investment Bank for lifting its restrictions on public services inZambia, saying this would ensure that projects that had stalled due to governance concerns would now continue. He reiterated that Government had instituted measures to reverse the perception that the public service was the “axis of corruption” inZambia.

“Finally, the era of circumventing tender processes is over. All Government procured projects, all Government guaranteed contracts and any other projects of slight or absolute public interest must henceforth have provision for competitive tender participation, he said.

For all public works, we will also ensure that the Zambia Public Procurement Authority is involved in our negotiations with cooperating partners and other financiers to ensure that our observance of procurement procedure and regulations is water tight. We will not live with the perception that the public service and its agencies are the axis of corruption and financial indiscipline inZambia, Mr. Chikwanda.

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