eBusiness Weekly
— To hold investor round-table next week — Targets regional, global financiers
Martin Kadzere —
Zimbabwe has developed a framework that will help it issue debt instruments that finance projects considered climate-smart, officials involved in the matter have said.
The instruments, commonly known as “green bonds”, have emerged in recent years as a favoured option for driving sustainable economic development. Deliberations would be held in Victoria Falls next week where regional and global financers and international agencies will meet, Infrastructure Development Bank of Zimbabwe head of resource mobilization Willing Zvirevo told Business Weekly.
The investor round-table will bring together experts from the United Nations, World Bank, Development Bank of South Africa, the African Development Bank and the Infrastructure Development Bank of Zimbabwe. The Government will be represented by environment experts from the Environment, Water and Climate Ministry.
The green bonds are a growing category of fixed-income securities, which raise finding for projects considered healthy to the environment. According to Climate Bonds Initiative, global green bond deals are expected to reach $130 billion by year end. Zimbabwe has already submitted various projects to the United Nations Forum Convention on Climatic Change and next week’s conference, will among other related issues, and focus on how Zimbabwe could mobilize financial resources to fund such projects.
“As a country, we need to see how we can grow (the economy) in a way that is not harmful to the climate,” said Zvirevo.
“We have a framework, which basically outlines how Zimbabwe can raise ‘clean’ funding to support environmentally friendly projects.
“In future, we intend to float the bonds; to raise money from domestic and global markets to raise funding for the projects that have positive impact on our climate.”
About 10 years ago, when green bonds set in, only a few million dollar worth of debt was issued in a market that has largely been dominated by private institutional borrowers from Europe and America, climate analyst Jeffrey Gogo said.
But amid growing global effort at halting the emission of climate-changing gases effectively, the green bond market has swelled into billions, with governments now catching on. Gogo said the round-table had come at a critical moment, when Zimbabwe was seeking to ease two decades of severe power shortages, and to meet up with its greenhouse gases emission goals under the Paris Agreement, in part achieved through domestic spend.
To achieve its goal of a 33 percent cut in emissions by 2030, mostly through increased investment in renewable energy and improvements in energy efficiency, the country said it would need up to $55,8 billion in global finance, with a small portion funded by Treasury.
“As a sovereign borrower that has struggled to access offshore loans due to high country risk profile, Zimbabwe could now use such platforms to interact and engage more deeply with potential investors keen on bankrolling environment-centred projects, by selling green debt,” said Gogo.
“Also, it is interesting that clean energy projects have tended to dominate the green bond market.
“That’s because the energy industry, as indicated by the runaway burning of fossil fuels to produce electricity or to provide fuel for cars and aeroplanes, is the biggest source of emissions worldwide, and that’s where most of the emission cuts are needed.”
Gogo said Zimbabwe was likely to follow the global pattern. But without extra legislative incentive to attract big money overseas investors such like mutual, pension or insurance funds to invest into climate-centric projects, there was no telling whether the targeted investors would be keen on subscribing to Zimbabwe’s green bonds.
