Zambia announces US$ 96.7 Million Green Bond issue to expand renewable energy, leveraging BIOFIN-supported regulatory reforms

10th December 2024 – Lusaka, Zambia

Zambia’s Copperbelt Energy Corporation Renewables (CEC Renewables),credited for issuing the country’s first ever Green Bond in 2023 has announced a second tranche valued at US$ 96.7 million.

Zambia made history in issuing its first-ever green bond in 2023 valued at US$ 53.5 million intended to boost the share of renewable energy in its national grid. This was riding on the efforts of the Biodiversity Finance Initiative which helped put in place the regulatory framework enabling issuance of green bonds in Zambia.  This latest tranche is part of a seminal effort by CEC Renewables, aiming for a target cumulative issuance of US$ 200 million.

This bond reduces emissions contributing to climate change mitigation as well as biodiversity conservation.

A Moment of Celebration: Bell Ringing Tradition

The announcement event, held at the Mulungushi International Conference Centre in Lusaka, featured a ceremonial bell ringing session, symbolizing the official listing of the green bond tranche on the Lusaka Securities Exchange (LuSE). This time-honoured tradition underscores the significance of local listings and celebrates milestones in Zambia’s financial markets.

CEC Renewables celebrates a landmark moment with the LuSE, SEC, and the Ministry of Energy and other stakeholders, through the bell-ringing ceremony, marking the successful issuance and listing of the US$ 96.7 million second tranche of its 200 US$ Million total registered Green Bond

BIOFIN Zambia’s Strategic Role

UNDP BIOFIN  Technical Advisor for the Africa Region Bruno Mweemba sharing insights on  Phase Two' of the Green Bond Market Development Technical Assistance at the CEC-R Green Bond second tranche announcement

At the event, UNDP BIOFIN Technical Advisor Bruno Mweemba emphasized the Initiative’s pivotal role in shaping Zambia's green finance ecosystem. BIOFIN reaffirme its commitment to Phase Two of the Green Bond Market Development Initiative, highlighting plans to provide technical assistance, address market gaps, and enhance issuer capacity for green bond adoption.

BIOFIN’s instrumental groundwork in supporting the development of the green bond market in Zambia involved:

• Collaborating with financial sector regulators, including the Securities and Exchange Commission (SEC), to establish Zambia's 2019 Green Bond Guidelines, a framework that laid the enabling regulatory environment to facilitate green bond issuances.
• Supporting the Lusaka Securities Exchange (LuSE) in developing Green Bonds Listing Rules, providing an avenue for listing of green bonds on the exchange.
• Advocating for and achieving a 15% withholding tax exemption for green bond investors, enhancing the attractiveness of Zambia's green bonds on both the local and the global stage.
• Advocating for a 60% discount in registration fees for green bonds in Zambia by the Securities and Exchange Commission further making the instrument more attractive for potential issuers.

Phase Two: Scaling Up Green Finance

Building on these achievements, Phase Two of the Green Bonds Market Development work that BIOFIN is currently implementing aims to:

• Address market gaps and barriers limiting further green bond adoption.
• Provide technical assistance and capacity building to potential issuers.
• Foster collaborations and partnerships that ensure transformative projects like CEC Renewables’ solar initiatives are realized.

UNDP BIOFIN  Technical Advisor for the Africa Region Bruno Mweemba sharing insights on  Phase Two' of the Green Bond Market Development Technical Assistance at the CEC-R Green Bond second tranche announcement

BIOFIN Zambia joins the Securities and Exchange Commission at the launch of CEC Renewables' green bond second tranche launch ceremony

CEC Renewables: Pioneering the Future of Green Finance in Zambia

CEC Renewables’ second green bond tranche is anexample of the tangible results of BIOFIN’s foundational efforts. The US$ 96.7 million issuance will the company’s Itimpi Solar PV Plant, adding 136 MW of clean energy to Zambia’s power grid.

Once completed, CEC Renewables’ total solar capacity will reach an impressive 236 MW, significantly contributing to Zambia’s renewable energy goals and helping counteract the country’s ongoing energy crisis. Enhancing energy access and availability is an important factor in countervailing the detrimental effects of deforestation, a key driver of biodiversity loss in Zambia, thereby contributing to broader environmental and climate resilience goals.

CEC Managing Director and CEO, Mr. Owen Silavwe, emphasized the urgency of accelerating sustainable solutions: "The energy crisis the country has faced has been a wake-up call for all stakeholders in the power sector. It is imperative to accelerate the development of sustainable solutions to achieve national energy security."

Looking Ahead: Green Finance as a Pillar of Sustainability

As Zambia works to tackle its ongoing energy challenges, green finance stands out as a pivotal driver of sustainable development. BIOFIN is committed to broadening the country’s green bond market, equipping potential issuers with the necessary tools to succeed, and catalyzing transformative projects.

The successful issuance of CEC Renewables’ second green bond tranche underscores the transformative power of innovative financing mechanisms in advancing climate resilience, fostering economic growth, and championing nature-positive initiatives. This milestone highlights the urgent need to accelerate the development and adoption of such mechanisms to secure a sustainable future.