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Zambia will invest $275 million in its energy sector after completing a landmark $1.36 billion sovereign Eurobond buyback supported by the African Development Bank (AfDB).

The government used a $600 million loan from the AfDB, alongside its own resources, to repurchase the Eurobond and ease future debt-service pressures. According to an AfDB statement, savings from the transaction will be directed towards projects aimed at improving access to reliable and affordable electricity across the country.

The Bank said the deal could become a model for other African countries seeking to convert debt savings into development spending, particularly in critical infrastructure sectors where financing gaps remain high.

The financing arrangement links sovereign debt management with a 15-year investment programme for Zambia’s electricity system, including efforts to strengthen grid resilience, reduce distribution losses and expand access in underserved areas.

Felix Nkulukusa, Secretary to the Treasury at Zambia’s Ministry of Finance and National Planning, said the initiative showed how targeted energy investment could support sustainable development and long-term economic growth.

“These investments will strengthen the resilience of our electricity system and help ensure that households, businesses, and public services can depend on a more stable and efficient power supply,” Nkulukusa said.

He added that unreliable power supply, losses in the distribution network, and limited access in underserved communities had constrained growth, deterred investment and affected quality of life. “This programme is our commitment to changing that,” he said.

Nana Spio-Garbrah, Manager of Structured Finance and Client Solutions in the African Development Bank Group’s Syndications and Client Solutions Department, said the transaction reflected the Bank’s commitment to practical financial solutions tailored to African countries’ debt and development challenges.

AfDB said the debt solution comes as Zambia continues efforts to restore macroeconomic stability and strengthen public finances following recent reforms. The transaction is expected to support the country’s commitment to fiscal discipline while investing in a stronger, more resilient electricity network that is critical to growth in mining, agriculture, manufacturing, tourism and other sectors of the economy.

The African Development Bank Group said the transaction aligns with its priorities of enhancing access to capital and building climate-resilient infrastructure, while supporting wider efforts to expand affordable, dependable and sustainable energy access across Africa.