ZANACO launches 100m USD bond to support climate projects

ZANACO has launched a 100 million United States dollars Medium-Term Note Programme that will support the issuance of sustainability bonds aimed at mobilising long-term capital for green and social projects in Zambia. British Investment International (BII) offered technical…

ZANACO has launched a 100 million United States dollars Medium-Term Note Programme that will support the issuance of sustainability bonds aimed at mobilising long-term capital for green and social projects in Zambia.

British Investment International (BII) offered technical support for the establishment of the bond Framework and has invested USS 15 million on the platform.

The programme will begin with an inaugural US$ 50 million sustainability bond, with further issuances expected over time.

The proceeds will be directed towards eligible projects in areas including renewable energy, climate-resilient agriculture, financial inclusion, affordable housing, healthcare, education and other initiatives with measurable environmental and social benefits.

Speaking at the launch at ZANACO Chief Executive officer Mukwandi Chibesakunda said  the bank’s inaugural sustainability bond will go beyond raising capital, with proceeds expected to support climate resilience, economic growth and social development in Zambia.

Dr Chibesakunda said the bond, to be issued under ZANACO’s US$100 million medium-term note programme, has marked a shift from the bank’s earlier commitment to sustainable finance towards execution.

“At ZANACO, our purpose is anchored on our You First philosophy. It is a commitment that places our customers, communities and our country at the centre of every decision we make,” he said.

Dr Chibesakunda said the sustainability bond would create financing opportunities for farmers seeking to strengthen their resilience to climate change, entrepreneurs and small and medium-sized enterprises (SMEs) looking to expand, as well as communities in need of critical social infrastructure.

She said the initiative was particularly important amid growing climate-related risks facing Zambia and other parts of the world.

Under the sustainability bond programme, ZANACO intends to channel financing towards climate-smart agriculture, renewable energy, energy efficiency, financial inclusion for SMEs and critical social infrastructure.

And British International Investment (BII) Managing Director and Head of Africa Chris Chijiutomi said the transaction was aligned with BII’s new five-year strategy, which places emphasis on strengthening the local financial system.

“One of the priorities of our new strategy that we launched this year is to help strengthen local financial systems and mobilize more private capital,” Mr Chijiutomi said.

Mr Chijiutomi said development finance institutions such as BII could provide investment, but greater mobilisation of private capital was necessary to expand development financing in economies such as Zambia.

He described the sustainability bond as an important milestone for Zambia’s financial sector and said it had the potential to encourage additional local and international investors and contribute to the development of the country’s sustainable finance market.

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Meanwhile, British High Commissioner to Zambia Rebecca Terzeon said the transaction demonstrated the UK’s shift towards an investment-led approach to development partnerships.

Ms Terzeon said BII’s investment in ZANACO’s sustainability bond showed how UK-supported development finance could be combined with Zambian institutions to support commercially viable investments while delivering development outcomes.

“This is exactly what the UK means when we talk about donor to investor,” Ms Terzeon said, referring to the mobilisation of finance to help businesses grow, create jobs and strengthen Zambia’s economic resilience.

Lusaka Securities Exchange (LuSE) Chief Executive Officer Nicholas Kabaso said the issuance marked a new chapter for Zambia’s capital markets and described it as the first sustainability bond issued by a Zambian bank.

Mr Kabaso said the exchange would work with stakeholders to develop a pipeline of future thematic bond issuances, simplify the issuance process and standardise reporting and verification requirements.

And Securities and Exchange Commission Director of Policy Development and Market Mateyo Lungu said the transaction was consistent with Zambia’s Capital Markets Master Plan, which seeks to develop innovative financial products and deepen the contribution of capital markets to national development.

Green Economy and Environment Minister Gilbert Siame said government supports initiatives that mobilise capital for climate-resilient and sustainable development.

Dr Siame said sustainable finance is  important in financing the country’s transition towards a greener and more resilient economy, adding that the government was working to create an enabling policy and regulatory environment for climate finance.