GUEST ARTICLE: Zambia’s government bonds gain a global audience.

By Muzala Shinka Why inclusion matters Reuters reported Sept. 14 that Zambia had qualified for J.P. Morgan's new local-currency government bond index. The main advantage is access to a wider audience of investors. Easier trading and cheaper borrowing could follow, but neither is guaranteed. The GBI-EM Edge index is expected to launch by the end

Audio article Listen to this story Share Send this story

By Muzala Shinka

Why inclusion matters

Reuters reported Sept. 14 that Zambia had qualified for J.P. Morgan’s new local-currency government bond index. The main advantage is access to a wider audience of investors. Easier trading and cheaper borrowing could follow, but neither is guaranteed.

The GBI-EM Edge index is expected to launch by the end of September, covering nearly $330 billion of local-currency government debt across 26 countries. That is approximately K6.51 trillion. All conversions use K19.7195 per $1, the calculated midpoint of Stanbic Bank’s quoted buying and selling rates on Sept. 21, 2026.

Zambia will sit alongside African markets including Egypt, Morocco and Nigeria, and others such as Vietnam, Pakistan and Sri Lanka. Sharing a benchmark gives investors a basis for comparison; it does not mean these countries carry identical risks.

For the government’s 10-10-5-3-3-1-1-1 Grow Zambia agenda, this could help support ambitions for production and infrastructure investment. Inclusion is an encouraging development, not a formal endorsement of the program or a commitment of investment.

How Zambia qualified

Eligible bonds must be worth at least $250 million equivalent, approximately K4.93 billion, with at least two-and-a-half years left before repayment. Zambia’s efforts to enlarge its bond issues helped it qualify.

That connects directly to the Bank of Zambia’s strategy of adding to existing bonds rather than creating separate small issues. Its target is at least K10 billion, approximately $507 million, per benchmark bond.

The framework covers 5, 7, 10 and 15-year bonds, although the 5-year bond is not being issued further in 2026. The announced auction schedule is twice per quarter, rather than monthly.

Bond auctions allow government to borrow money. The index can draw more investors’ attention to eligible government bonds; it does not replace bond auctions.

What investors and taxpayers could gain

There is historical evidence of a gap between quotations for buying and selling government bonds in Zambia. Essers et al. reported a secondary-market bid-ask spread of 100 basis points for 2013. This is not a measured discount from a bond’s face value, but it illustrates the trading friction investors faced.

The study, subsequently published in a peer-reviewed journal, identifies weak liquidity and narrow investor bases as obstacles to bond-market development. Someone needing to sell a government bond before maturity may struggle to find a buyer offering a reasonable price.

If the J.P. Morgan government bond index inclusion brings more buyers and higher trading volumes to Zambia’s government bond market, it could reduce the risk of accepting an unfavorable price simply because buyers are scarce. More transactions would also provide clearer price comparisons, helping sellers assess offers and investors prepare auction bids.

Stronger competition and easier resale could lower the interest rate that investors demand, reducing government’s borrowing costs. This is the significance of inclusion in the J.P. Morgan bond index: It could bring down borrowing costs. But inclusion alone cannot guarantee this.

What the 8% limit means

No country may exceed 8% of the index. Applied to the headline total, that is $26.4 billion, approximately K520.59 billion.

This is not Zambia’s confirmed share, promised investment or a ceiling on trading. The index measures a bond market; it does not distribute a fund.

Conclusion: Government should turn this attention into investment

Zambia has gained global investor visibility, not an investment windfall. The opportunity is to attract sustained investment, make government bonds easier to trade and improve borrowing terms. The government should use that opening to finance the Grow Zambia agenda investment, not simply accumulate more debt.

Engage with this story

Comment 0Likes 0Reactions 0Comments 0Shares Be the first reader to react to this story

Discussion

Join the Conversation

Share your thoughts. Let's keep it respectful and constructive.

Start the discussion Sort by: No comments yetBe the first to bring a thoughtful perspective to this story. Comment as a guest No account is needed. Sign in only if you want your comment tied to your profile. Sign in instead