As the global environment becomes more cognizant of climate risks, Zambia’s largest indigenous bank by asset size and profitability has geared up for the radical shift in financing needs aligned to a green agenda. The Lusaka Securities Exchange (LuSE) listed bank is vividly reflecting climate risk in its risk appetite that has seen it in collaboration with World Wide Fund for Nature (WWF) and private equity firm Kukula Capital, commit to a K1 billion ($59 million) SME Green fund. The fund will form a pool from which small to medium sized enterprises can source funding for green business initiatives that create green jobs.
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This initiative is the first ever of its kind in Africa’s copper producer and comes at a time the world is driving towards attainment of the United Nations Sustainable Development Goals (SDG2030) while the G7 have aggressively flagged ‘climate risk’ as top on the global threat landscape which could result in erosion of 10% ($23 trillion) global gross domestic product by 2050 if the world does not act urgently. WWF in Zambia, has been actively involved in helping stakeholders realize the preservation of natures capital as potential solution to the wider array of fiscal hurdles the sovereign faces in the wake of fiscal fragilities amplified by a ravaging COVID19 pandemic. Access to finance, remains a key challenge for most small scale businesses yet the sustainability agenda could be the next best thing in credit risk management through ensuring small businesses tap into green pools to fund climate sensitive projects.
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“We as Zanaco are proud to be leading the first ever ‘Green Outcome Fund’ in Zambia. We believe that this will help form a solid foundation as we address climate change, sustainability and alternate livelihoods for our communities. We take this seriously as stakeholders participating in making the world a better place for our future citizens.
It is simply the right thing to do for our environment today and tomorrow.
Zanaco Plc Chief Executive Officer Mukwandi Chibesakunda
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Capital markets in the red metal hotspot have readied for the immense fundraising opportunity to attract green pools through indigenous and international bond issuances for climate resilient and sensitive projects. With the world experiencing record issuances of green bonds expected to be north of $590 billion in 2021, it is becoming clear that climate resilient or green projects will become the greatest houses for green pools (financing) while accessing international credit lines will be a hurdle for entities or sovereign that do not comply with climate change regulation or standards.
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“Greening is the new normal and so is partnering for the Sustainable Development Goals. As a Commission, we are extremely pleased that we have not been caught napping when it comes to the green economy resolve. We are ready – we put in place an enabling environment late 2019 and did not stop there. We continued to raise awareness and on-board as many partners to join hands as we journey on this transition to sustainable businesses. The partnership of two existing market players and a conservation organization catalyzing and managing green funds (WWF) is an encouraging milestone. It is certainly a green light that we are ready to take practical steps to greening Zambia. Partnerships of this nature are a winning strategy to building compliance capacity on outcomes.”
Director Market Supervision and Development at the Securities & Exchange Commission Mutumboi Mundia
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Being the largest indigenous financier in the Southern African nation, the green funding initiative has also set the the tone for other listed financial institutions and peers in the industry to emulate. Partnering in Zambia’s sustainable growth agenda will require total compliance with global best practice while keeping a tab on the Environmental Social and Governance (ESG) tenets.
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“This exciting partnership between WWF Zambia, Zanaco and Kukula Capital responds directly to the threat of climate change and environmental degradation faced in Zambia’s economy today. This fund will simultaneously support the growth and green ambition of SMEs by assisting them to mitigate these environmental risks, while delivering business and social returns to their shareholders, communities and customers ”
World Wide Fund for Nature Zambia Country Director Nachilala Nkombo
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The role of capital market players such as Kukula Capital can never be overemphasized in channeling green funds to appropriate climate resilient projects requiring financing. The World Wide Fund for Nature (WWF) continues to reveal the importance of nature which sets the framework for solutions to global and indigenous economic hurdles.
The Kwacha Arbitrageur
