Zambia's first green bond to be issued by year-end
Zambia's Copperbelt Energy Corporation (CEC) is set to issue the country's inaugural green bond by the year-end, as announced by the power company this week. The $54 million bond is part of a larger $200 million green bond program.
The funds raised through this initiative will be allocated to support solar energy generation, aligning with CEC's objective to produce 200MW of renewable energy, according to a statement by Owen Silavwe, the CEO of CEC, released during the COP28 climate summit.
The regulatory framework for issuing green bonds within Zambia was finalized in December 2022, facilitating the financing of climate-related projects locally. Nonde Sichilima, a director at Zambia's Securities and Exchange Commission, expressed optimism about CEC's announcement, anticipating that it would stimulate the listing of additional green bonds. This, in turn, is expected to serve as a capital-raising avenue for green initiatives and contribute to the expansion of capital resources in the country.
Green, Social, and Sustainable (GSS) bonds have gained significant traction on a global scale as policymakers and financiers seek market-driven solutions to address climate change. This trend is part of a broader surge in financial instruments aligned with environmental, sustainability, and governance (ESG) objectives. Despite Africa holding 23% of official climate finance, the continent accounts for less than 1% of global green bond issuances. Moreover, African nations face the challenge of paying more than twice the rates of similarly rated peers to access financial markets. Presently, Africa faces a multitude of pressing issues, including a high debt burden, historical challenges with borrowing costs, post-COVID recovery, climate change impacts, and shortages in energy and food due to the conflict in Ukraine. Given these challenges, there is an increased urgency to explore innovative avenues for raising funds from private investors within a transparent and efficient framework, and at reasonable rates. This becomes crucial to navigate the complex landscape and address the diverse economic and environmental challenges facing the continent.