Prominent economist Professor Oliver Saasa has commended government’s move of awarding the contract to Lazard as the best evaluated bidder to advise Zambia on its debt restructuring.
Prof. Saasa has stated that though the decision has attracted significant interest among economic and political players, Zambia however urgently needs re-profiling of its national debt which is almost due and its restructuring should not be a questionable matter.
Ministry of Finance had last week announced it had selected Lazard, a financial advisory and asset management firm as advisor to provide consulting services to the Zambian government for liability management and restructuring of its debt portfolio over a period of three years.
Prof. Saasa has told the Zambian Business Times – ZBT in an exclusive interview that government’s decision was based on the competency of the firm, therefore nationality of which company needed to be selected to restructure debt should not be an issue as a tender was issued we’re all those who have the skills and expertise would have lodged their papers.
He further stated that it is important to recognize that debt restructuring particularly sovereign debt needs certain proved skills and expertise, hence, he is hopeful that Lazard will bring on board what the country is looking for.
“There should also be the will [from top officials at the ministry of finance] to take in advise while this process in ongoing, whether its from an international or local firm. Lazard can come in and make proposals to government on how best the restructuring can be done or negotiated but the political will to take in advise has to be there,” he said.
Prof. Saasa added that there is need to also understand that debt restructuring is different from minimizing a default as this is the reason why Lazard has come in to help stop the possibilities of Zambia’s debt defaulting which if left unattended too becomes more dangerous for the economy.
“At the same time, I don’t see why someone should pay so much money [US$5 million] to bring in a foreign company because the country and the Southern African region has enough competence that can help government put in place systems that can manage debt restructuring. However, this decision must have been analyzed and was seen worth it, and this cannot be questioned,” He said.
There has been some concerns by some sections of the society in Zambia on why a foreign firm was selected and that the contract which has been pegged at US$5 million has been considered as high.
But analysts have countered this by stating that a request for proposals was initially sent out and that only a combined bid from Barclays and ABSA who have a presence in Zambia was the only response that was listed among the firms which had successfully tendered for the job.
