ZAMBIA REGISTERS FIRST EVER GREEN BOND

 ZAMBIA REGISTERS FIRST EVER GREEN BOND

....a programme  that will accelerate the actualisation of country's ambitions to generate aleast 200MW of renewable energy.


By Alfonso Kasongo
Zambia has for the first time registered Green Bond since government's intention to broaden climate financing to bridge the finance source gap through emerging financing instruments such as green bonds and carbon credits among others.

The  announcement by the Copperbelt Energy Corporation (CEC) PLC, a private electricity firm ,that it has registered its green bond with the Securities and Exchange Commission (SEC) during the sidelines of the COP 28 Climate Summit in United Arab Emirates makes it the first ever green bond to be registered in the country.

Since the development of Green Bond Guidelines in 2019, no green Bond was registered with the Securities and Exchange Commission (SEC).

The registration means that CEC will now issue securities such as shares, bonds on the capital market to attract investment in green energy.
The company is optimistic that the registration of the US $200 million Green Bond will  attract more green finance in the country but according to incentives announced by government through the ministry of finance and national planning  in 2022,any  green investment listed on country's stock market  will in the first three years enjoy withholding tax exemption.

In 2019 Zambia developed Green Bond guidelines and to further incentivise the private sector in environmental spectrum, government through ministry of finance and national planning ,announced withholding tax exemption on interest earned on green binds with a maturity period of three years that are listed on the Security Exchange in Zambia.
CEC Managing Director, and Chief Executive Officer. Owen Silavwe

And making the announcement during the Climate Summit in Dubai, United Arab Emirates, on Energy Day, CEC Managing Director, and Chief Executive Officer. Owen Silavwe, disclosed  “we are pleased to announce the registration of our US$200 million Green Bond, structured as a programme, whose proceeds will accelerate the actualisation of our ambitions to generate at least 200MW of renewable energy and specifically solar energy with possible storage implementation.”

Speaking at the same function, Minister of Green Economy, and Environment, Engineer Collins Nzovu, reiterated that the Zambian government has developed a green growth strategy, which is part of her aspiration to become a prosperous middle-income country by 2023.
              Eng. Colluns Nzovu- Minister MGEE

The minister further indicated that the Green Growth strategy is Zambia’s blueprint for greening the economy and the environment by deliberately pursuing a development trajectory that is resource efficient, low carbon, climate resilient and socially inclusive.

Engineer Nzovu explained that the Government has put in place two regulatory frames that are being leveraged to raise green investments, these being the Green Bonds Framework issued by the Securities and Exchange Commission in 2019 and the Green Loans Framework issued by the Bank of Zambia.

The Minister congratulated CEC for successfully registering the country’s Debut Green Bond, further commending the private sector’s leadership in showcasing Zambia’s prowess in the green energy transition.

The US$200 million bond programme has its first tranche of US$54 million, closing by the end of the year. 

The lead arrangers of the Green Bond are Cygnum Capital, with Emerging Africa Investment Fund (EAIF), as cornerstone investors in partnership with Absa Group.

“We are proud to have been the lead arrangers for CEC’s green bond”, Cygnum Capital representative, James Doree said. “It demonstrates how the combination of a strong sponsor; a transparent policy framework and supportive anchor investor can drive private sector solutions to the green energy transition.”

“We are thrilled to be the cornerstone investor to the first Zambian green bond programme” said Paromita Chatterjee (representative of the Emerging Africa Investment Fund, a Private Infrastructure Development Group (PIDG) company).”

He added that he is confident that this avenue of financing will complement the traditional financing options to fast-track energy transition. 

“Our partnership with the sponsor has made it possible to actualise the ingenious financing” said Theuns Ehlers, head of project finance at Absa Group. “Having a sponsor with strong operational and financial capabilities has helped the structuring and bankability of a private-to-private project finance bond raise therefore, we are very proud to be associated with this transaction.”   
 
Meanwhile the Securities and Exchange Commission Director for Market Supervision and Development, Nonde Sichilima said “the announcement of the registration of the green bond is a positive development for our capital markets. We anticipate that it will catalyse the listing of more green bonds as a means of capital raising for green initiatives and contribute towards deepening capital in our country”.

The proceeds from the bond, will be deployed towards further solar generation investments within the CEC Group through CEC Renewables. CEC Renewables is an investment vehicle established by the CEC Group, through which renewable energy development is actualised.
 
“We began our renewable energy journey, particularly in solar generation 5 years ago and our announcement today is an affirmation of our commitment to support Zambia’s green energy transition”. Said Mr Silavwe.
The Bond will open and close within December 2023.

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