News that Zambia is drawing interest from international capital is a good thing. A few days ago, the Zambian president met a delegation of investors led by JP Morgan Chase. Having completed its debt restructuring and regained access to global markets, the country is now demonstrating that its reforms and growth potential command genuine confidence from the investment community

But as Zambia finally eases its way out from under a heavy debt burden, one hopes it is not simply swapping old financial obligations for new ones. Not to be alarmist, but the risk remains that in the absence of a carefully managed transition, new loans that are secured now mean that in 20 or 30 years time, future generations could find themselves footing the bill through repayments, interest payments, and profit outflows that siphon resources away from domestic priorities and local development needs.

Let us break it down.

On one hand, global capital can deliver real benefits. Consider Kenya’s Standard Gauge Railway, completed in 2017 with substantial Chinese investment, which cut travel time between Nairobi and Mombasa from over twelve hours to under five whilst creating thousands of jobs during construction. In Senegal, the $2 billion Sendou coal-fired power plant, completed in 2018 with backing from international investors, added 125 megawatts to the national grid and helped address chronic power shortages. Meanwhile, Mozambique’s Coral South floating LNG facility, which began production in 2022 with investment from firms including Italian Multinational Energy company ENI and the American oil company ExxonMobil, represented Africa’s first offshore LNG project and promised billions in future export revenues. Global capital can provide large-scale funding for infrastructure, mining, agriculture, and energy projects that domestic resources alone might not cover. It can create jobs, boost exports, and bring in technology, skills, and management expertise that help build capacity. These inflows have the potential to accelerate economic growth and raise living standards in the short to medium term.

No one is questioning or doubting the potential.

On the other hand, and this is where my problem lies, the primary winners, those who earn the large profits, are usually those supplying the capital. And here let’s be clear that private investors, unlike aid donors, expect substantial returns. They do not invest for charity. They don’t, for example, care if your debt interest payments mean you don’t have sufficient money to spend on Education or Healthcare. And the profits that are generated, are often repatriated abroad. Further, if the capital arrives as loans or bond issues, there are usually fixed repayment schedules with interest. If these are missed or not serviced timely, it affects the credit rating of the country. Over time, this can create dependencies and limit policy space, especially if there are delays in implementation (which is often the case) or if projects underperform or external conditions change (for example COVID19).

Contrast this with South Korea’s rapid development following the Korean War. That success rested heavily on extensive American government aid, much of it comprising concessional grants and loans tied to strategic goals rather than commercial profit. The state could direct resources through the chaebols and export-oriented industrial policies without facing the same pressure from private creditors demanding high returns. Seoul had the breathing room to build heavy industries, nurture domestic champions, and pursue long-term development strategies that might have looked unprofitable in the short term but laid the foundations for sustained growth.

Japan offers another relevant example. In its post-war recovery, Japan relied mainly on high domestic savings rates, postal savings systems, and government-guided financing through institutions like the Japan Development Bank. Foreign borrowing was limited, and the focus stayed on internal capital mobilisation and industrial policy, allowing Japan to retain control and build wealth domestically. The result was that Japan avoided the debt traps and dependency relationships that plagued many developing nations in subsequent decades. Profits generated by Japanese firms remained largely within the country, reinvested into research, infrastructure, and further industrial upgrading. The government maintained policy autonomy, free to protect infant industries, subsidise strategic sectors, and impose capital controls without answering to foreign creditors. By the 1980s, Japan had become the world’s second-largest economy and a net creditor nation, its corporations dominating global markets in automobiles, electronics, and machinery whilst its citizens enjoyed rising wages and comprehensive social protection.

Malaysia provides a more mixed case. It has actively courted foreign direct investment for decades, particularly in manufacturing and electronics, which helped transform it into an upper-middle-income economy with strong export sectors. Yet even Malaysia has had to manage high public and household debt levels carefully to avoid instability, showing that FDI success still requires strong governance and regulation. What is notable from Malaysia’s development is that the government maintained strict fiscal discipline during critical growth periods, keeping budget deficits relatively contained whilst investing heavily in education, infrastructure, and targeted industrial subsidies. Kuala Lumpur imposed performance requirements on foreign investors, demanding technology transfer and local content provisions rather than simply opening the door to extractive capital flows. The state retained significant ownership in strategic sectors through entities like Petronas, ensuring that resource wealth contributed to national development rather than flowing entirely to foreign shareholders. Malaysia also built up substantial foreign exchange reserves as a buffer, reaching over $100 billion by the early 2000s, which provided policy space during external shocks like the 1997 Asian financial crisis. Crucially, and this is very important: the government of Malaysia has often resisted wholesale privatisation pressures and maintained capacity for counter-cyclical spending, allowing it to cushion downturns without submitting entirely to external creditor demands.

As Africans, we have to be careful about the terms on which we accept external help. We shouldn’t be too excited like little kids, and begin to clap as soon as a white man comes through the door. We should be wise in our transacting, and learn from the experiences of others. Here, we’re fortunate that history is full of cases where foreign capital has flowed in amid promises of development but ended up extracting more wealth than it created locally – with profits going offshore and little lasting benefit for ordinary people. Before we mobilise foreign capital, we ought to step back and ask what else we can achieve through our own efforts that will carry fewer long-term costs and complications for our children, and children’s children? What about a Diaspora Bank? What about Cooperatives? What about Private Public Partnerships where the state owns at least 51% of the entity.

Walter Rodney, in his seminal work How Europe Underdeveloped Africa (1972): said this:

“Colonialism was not merely a system of exploitation, but one whose essential purpose was to repatriate the profits to the so-called mother country. From an African viewpoint, that amounted to consistent expatriation of surplus produced by African labor out of African resources. It meant the development of Europe as part of the same dialectical process in which Africa was underdeveloped.”

Rodney in these words highlights how external capital and investment historically prioritised the extraction of wealth for foreign benefit, and not for the local. Even back then, repatriating profits abroad had the same effect we’ve seen of stunting local development, deepening inequalities and depriving the government of resources. This dynamic echoes in many contemporary foreign investment arrangements, where corporate returns often flow outwards with limited reinvestment or broad-based gains for local stakeholders. It should serves as a sobering reminder of the need for careful scrutiny of such inflows to avoid repeating patterns of unequal exchange.

I hope I am wrong, but I am skeptical that this latest wave will automatically translate into broad-based prosperity. Not everything that glitters is gold. And the long-term equation needs careful thought. If it were up to me, I would opt for the South Korean model or the Japanese template, than anything that burdens future generations with more debt. The true test will be whether Zambia can channel any capital that is secured into sustainable, locally owned growth without new debt traps.

Let us wait 15 years and return to this discussion to see whether it was a wise move or another chapter in a familiar and devious cycle.