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IDC Zambia to develop at least 600 MW of solar power

Predident Lungu

By Mutale Kapekele

The infamous load shedding may become a thing of the past or at least reduce should the development of two 50 MegaWatts solar power PV projects funded by the  International Finance Corporation (IFC), a member of the World Bank Group, come to fruition.

The IFC has signed a memorandum of understanding with the Industrial Development Corporation of Zambia to explore development of two 50 MegaWatts solar PV independent power projects in Zambia through the Scaling Solar program.

The projects would be Zambia’s first utility scale PV projects, providing competitively priced, clean power that would reduce Zambia’s dependence on hydro resources and diversify the country’s energy supply mix.

Zambian President Edgar Chagwa Lungu has directed IDC Zambia to develop at least 600 MW of solar power in the shortest possible time to address the current power crisis. IDC Zambia anticipates that the first two projects, with a combined initial target capacity of 100MW, will create the opportunity for subsequent expansion and the rapid scale-up in renewable energy generating capacity in Zambia.

President Lungu, who is also the Board Chair of IDC Zambia, said, “The Zambian government is resolved to address the current hydro power shortages caused by low rainfall through active promotion and increased use of renewable energy technologies.”

Low rainfall over the past year has resulted in a national power generation deficit of about 560 MW. Scheduled power outages are already having a negative impact on homes and businesses.

The proposed projects would be situated on separate sites and developed by different private sector sponsors, based on open and transparent selections.  It is expected that both projects would engage Zambian partners in the ownership structure. The commercial structure is expected to follow IFC’s recently-launched Scaling Solar initiative.

“IFC is developing this partnership with IDC Zambia to deliver affordable renewable energy that can mitigate the country’s ongoing energy crisis.” said Oumar Seydi, IFC Director for Eastern and Southern Africa. “The Scaling Solar program enables us to apply the full range of World Bank Group services to address Zambia’s challenges quickly and sustainably.”

IDC Zambia and IFC will seek to negotiate a formal advisory mandate within the next few weeks, under which IFC will be appointed as lead transaction advisor to IDC Zambia for the development of the projects.  Once this mandate is in place, project development will commence, with requests for prequalification expected to be issued to prospective developers within three months.

The Industrial Development Corporation of Zambia is domestic development finance institution wholly owned by the Zambian government, incorporated in early 2014. IDC Zambia’s mandate is to play a catalytic role in deepening and supporting Zambia’s industrialization capacity to support job creation and domestic wealth formation across key economic sectors. The IDC Zambia plays its role through evaluation, pricing and lowering the investment risk profile by serving as co-investor alongside private sector investors. IDC Zambia facilitates provision and raising of long term finance for projects. Simultaneously IDC Zambia serves as an investment holding company for state-owned enterprises and new investments that ultimately generates earnings for the proposed Zambia Sovereign Wealth Fund.

International Conference on Financing Development - The Take Aways

William Mwanza

William Mwanza, tralac Researcher, highlights seven key issues identified in the Addis Ababa Action Agenda
The Third International Conference on Financing for Development (FFD3) was held in Addis Ababa, Ethiopia, from 13 to 16 July, under the theme “Time for Global Action”. It was the first time the Conference was held on the African continent, after having been held in Monterrey, Mexico in 2002 and Doha, Qatar in 2008.

As noted in a previous discussion note (click here to read more), the Conference was held in the midst of some significant risks in the global economy. At the time the Conference was being held, efforts towards solving the Greek debt crisis continued in Europe, the Chinese Government reigned in with measures to halt steep losses on its stock market, and the price of brent crude oil had decreased by 10%, with forecasts of further decreases into 2016.

In spite of these prevalent risks in the global economy and in spite of initial failure to agree on a text in the drafting rounds of the outcome document, delegates to the Conference were able to agree on and adopt the Addis Ababa Action Agenda (AAAA). The framing of this outcome document is a noticeable departure from the ‘consensus’ reached in Monterrey, the ‘declaration’ issued in Doha, and the ‘Addis Ababa Accord’ as it was termed in the drafting sessions prior to the Conference. It signals the recognition and call for vigilance on the part of all UN Members so as to address challenges being faced in the global economy and in human development, with the main aim of delivering on the sustainable development goals (SDGs) to be agreed in September.

In line with this focus, Member countries recommitted themselves on a number of issues agreed in previous Conferences, as well as in new areas that are evolving and pertinent to the global development agenda. At the outset of the AAAA, a number of important issues for the global framework for financing development in the post-2015 era are highlighted, including delivering on social protection and essential public services; scaling up efforts to end hunger and malnutrition; promoting inclusive and sustainable industrialization; generating full and productive employment and decent work for all; protecting ecosystems; and promoting peaceful and inclusive societies. Of quite some significance to note was the welcoming of new initiatives for investment in infrastructure including the Asian Infrastructure Investment Bank, the Global Infrastructure Hub, the New Development Bank, the Asia Pacific Project Preparation Facility, the Global Infrastructure Facility, and the Africa50 Infrastructure Fund, as well as an increase in the capital of the Inter-American Investment Corporation. This was coupled with a call for the establishment of a global infrastructure forum, which would build on existing multilateral collaboration mechanisms and led by multilateral development banks (MDBs).

Prior to the Conference, these MDBs – including the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, World Bank Group – and the International Monetary Fund had committed to extend more than $400 billion over the next three years towards financing the SDGs.

While it is not possible to detail all the specific issues covered in the AAAA, some aspects in the respective action areas of the AAAA are worth highlighting as follows:

1. Domestic public resources

As ultimately the most important source of national development, Members reiterated their commitment to strengthening mobilization and effective use of domestic public resources. Fairness, transparency, efficiency and effectiveness of tax systems, and the curbing of illicit financial flows were particularly emphasised. In this regard, Members adopted the Addis Tax Initiative declaration, through which they committed to step up technical cooperation in tax/domestic revenue mobilisation; enhance domestic revenue mobilisation so as to spur development; and to ensure policy coherence.

2. Domestic and international private business and finance

The role of the private sector in driving sustainable development in the post-2015 era was encapsulated in a call for businesses to apply their creativity and innovation in solving sustainable development challenges and to bring about more sustainable production and consumption patterns. The importance of remittances as a source of finance was acknowledged and a commitment was made to ensure that remittance corridors do not require charges higher than 5% by 2030. New sources of financing such as philanthropic giving and development-oriented venture capital funds were welcomed. Members resolved to adopt and implement investment promotion regimes for LDCs; committed to provide technical support for project preparation (particularly noting the AU’s Programme for Infrastructure Development in this regard); and also committed to substantially increase the share of renewable energy. In this regard, they welcomed the Secretary General’s Sustainable Energy For All initiative, Power Africa, NEPAD Africa Power Vision and the Global Renewable Energy Islands Network.

3. International development cooperation

Members noted an increase in official development assistance (ODA) since Monterrey and were particularly encouraged by few countries that have met or surpassed their commitment of providing 0.7% of their gross national income (GNI) as ODA and 0.15% to 0.20% of GNI as ODA to LDCs. However, they expressed concern that many countries still fall short of their commitments and reiterated that this fulfilment remains crucial. They welcomed the decision of the EU to collectively achieve its overall ODA targets within the timeframe of the post-2015 agenda, and its commitment to LDCs in the short term. Members recognized the increase in the importance of South-South cooperation and viewed it as a complement and not a substitute to North-South cooperation. They welcomed the Lima call for climate action and were encouraged by the commitment to reach an ambitious agreement in Paris in 2015. They also welcomed the initial resource mobilization process of the Green Climate Fund, encouraged MDBs to channel resources towards long-term infrastructure and green bonds among other areas, and also acknowledged the role of the Global Environment Facility in mainstreaming environmental concerns into development efforts.

4. International trade as an engine for development

Members recognised the approval of the Bali Package in 2013 as an important achievement but recognized that multilateral trade negotiations require additional effort. They called on members to fully and expeditiously implement all decisions of the Package. They reaffirmed their commitment to strengthening the multilateral trading system, while noting that Africa’s trade remains low in spite of progress by other developing countries. Members committed to strengthening regional cooperation and regional trade agreements as important catalysts for reducing trade barriers and enabling companies to integrate into regional and global value chains. They urged an increase in support for projects that foster regional integration, with particular attention to the process in Africa. Members committed to strive to allocate an increasing proportion of Aid for Trade to LDCs. They also committed to endeavour to craft trade and investment agreements with appropriate safeguards so as to not constrain domestic policies and regulation in the public interest. In this regard, they requested the UN Conference on Trade and Development (UNCTAD) to continue existing consultations with Member States on investment agreements.

5. Debt and debt sustainability

Members noted that there has been strengthened macroeconomic and public resource management over the years, which has led to a significant decrease in the vulnerability of most countries to sovereign debt distress. However, it was noted with concern that many countries still remain vulnerable to debt crises, while some countries – LDCs, small island developing states, and some developed – remain in the midst of crises. They called for the urgent solution to such crises, and reiterated the need for debtors and creditors to work together to prevent and resolve unsustainable debt situations. They welcomed the IMF-World Bank debt sustainability analysis framework and recognized the applicable requirements of IMF debt limits policy and/or the World Bank non-concessional borrowing policy. They also reaffirmed the importance of effective debt restructurings, which should restore public debt sustainability while preserving access to financing resources under favourable conditions. These were seen as important for enhancing the ability of countries to achieve the SDGs.

6. Addressing systemic issues

Members noted that they have become increasingly aware of the need to take account of economic, social and environmental challenges. They committed to take measures that enhance global economic governance with the aim of attaining a stronger, more coherent, inclusive and representative international architecture for sustainable development while respecting the mandates of respective organizations. They reiterated the importance of international coordination and policy coherence in the reform of the global financial system so as to continue building resilience and reducing vulnerability to international financial crises. Members also recommitted to increasing the voice and participation of developing countries in international economic decision-making and norm-setting bodies and strongly urged the earliest ratification of the 2010 reforms proposed in the IMF. They looked forward to the upcoming review of special drawing rights by the IMF and called on it to provide adequate financing to developing countries. Members also committed to cooperate on international migration with full respect for human rights and to combat money-laundering, corruption and financing of terrorism.

7. Science, technology, innovation and capacity-building

Members noted how new innovations and technologies are powerful drivers of economic growth and sustainable development. They committed to promote ICT infrastructure and to design and implement policies that will incentivize the creation of new technologies, research in and support for innovation in developing countries, and increase investment and industrial diversification. They decided to establish a technology facilitation mechanism which will comprise a multi-stakeholder forum, a UN inter-agency task team and an online platform. Members also looked forward to progress on a proposed Technology Bank and innovation capacity-building mechanism for LDCs.

In conclusion to the AAAA, members noted the importance of high quality data for policy making at all levels. They committed to enhance capacity-building in this regard to developing countries. They also resolved to integrate a dedicated follow-up and review process of the financing for development outcomes with that of the post-2015 framework. They encouraged the Secretary General to convene an inter-agency task force that would build on the MDGs Gap Task Force, and would report annually on progress in implementing the financing for development outcomes within the context of the post-2015 agenda.

On the whole the FFD3 was a successful Conference. Reflecting the amount of diplomatic efforts that went into the process, the outcome document that was adopted at its conclusion was measured in its approach to discussing specific threats to global economic cooperation and sustainable development, but comprehensive in the scope of matters covered and specific commitments that are pertinent to the process. Although concluded in difficult circumstances, it sets a platform for the adoption of the sustainable development goals in September, and for concerted efforts in attaining them thereafter.

Zambia Successfully Issues US$ 1.25 Billion Eurobond

NEW YORK, Thursday, July 23, 2015 – Zambia on Thursday successfully issued the targeted amount of US$1.25 billion Eurobond for infrastructure development.

The Zambian team and representatives of Joint Lead Managers, Duetsche Bank and Barclays after Zambia successfully issued a US$1.25 billion Eurobond. PHOTO | CHIBAULA D. SILWAMBA | ZAMBIA UN MISSION

The Eurobond, with a coupon rate of 8.97 per cent, has an eleven-year average life with repayments in 2025, 2026 and 2027.

This issuance is in line with prudent debt management practices of the Government of the Republic of Zambia that will ensure a sustainable debt redemption profile.

The bond issuance that is in excess of two times oversubscribed, demonstrates investor confidence in the economic governance of country.

Finance Deputy Minister Honourable Christopher Mvunga, who led the Zambian delegation, said this success demonstrates confidence that the international financial community has in the leadership of His Excellency, Mr. Edgar Chagwa Lungu and the Patriotic Front (PF) Government.

“As the case has been in the past, the funds will be used in infrastructure related projects in the area of road, energy, education, health, water and transport sectors in order to better the lives of the Zambian people,” Mr. Mvunga said.

The Minister emphasized that the Government would strictly adhere to the programmed use of the resources.   

 “The fiscal consolidation measures outlined to the investors in the presentations will strictly be adhered to,” he said.

Mr. Mvunga said this was an opportune time for Zambia to issue bonds given the anticipated rising interest cost in the international markets in the near future.

Despite a challenging capital markets environment arising from global economic uncertainties, Zambia’s bond issue was met with high demand from international investors allowing the country to lock-in a competitive interest rate.

The Zambian delegation met over 60 fund managers during the five-day road show in the United Kingdom and the United States of America.

Mr. Mvunga committed that going forward, Zambia will conduct annual investor meetings to ensure transparent communication of the performance of the economy.

The delegation included the Secretary to the Treasury Fredson Yamba, Special Assistant to the President (Project Monitoring and Implementation) Lucky Mulusa, Permanent Secretary (Budget) Pamela Kabamba, the Deputy Governor of the Bank of Zambia (Operations) Bwalya Ng’andu and senior Government officials from the Ministry of Finance and the Bank of Zambia.

Issued by:

CHIBAULA D. SILWAMBA (Mr.)

First Secretary for Press and Public Relations

Permanent Mission of the Republic of Zambia to the United Nations

www.zambiaun.com Mobile: +16462405430, Email: chibaula@zambiaun.com

SDGs present valuable opportunities for Zambia – Mvunga

By Mutale Kapekele

Finance deputy minister, Christopher Mvunga, says the timing of Sustainable Development Goals presents a valuable opportunity for Zambia to synchronize them in the Seventh Development Plan, which will take effect from 2017 to 2021 and is currently being formulated.

Christopher Mvunga - Picture by Chibaula Silwamba

Mvunga was speaking when he delivered Zambia’s statement at the 2015 Annual Ministerial Review (AMR) meeting, a segment of the UN Economic and Social Council (ECOSOC) High-Level Political Forum on Sustainable Development at UN Headquarters in New York last week.

The SDGs – a proposed set of targets relating to future international development – will be adopted by Heads of State and Government to replace MDGs at the latter’s expiration during the UN Summit for the adoption of the Post-2015 Development Agenda to be held from 25 to 27 September 2015 in New York.

Several speakers at the High-Level Political Forum called on Member States to place greater emphasis on national planning institutions and processes that could efficiently coordinate development programs.

Mvunga said the new global development agenda for sustainable development should fully address the specific needs of all countries in special situations such as Landlocked Developing Countries (LLDCs) and Least Developed Countries (LDCs).

The Deputy Minister said SDGs accorded Zambia, and other countries, a great opportunity to decisively deal with the “unfinished business” carried over from the Millennium Development Goals (MDGs).

Mvunga said Zambia’s transition to the domestication of SDGs would be based on multi-sectorial engagement of stakeholders, recognition of the goals as universally applicable and promotion of partnerships in a transformative manner.

He said Zambia’s development plans were premised on promoting a sound macroeconomic management as a pre-requisite to attracting investment, expansion of employment opportunities and creating fiscal space to support infrastructure and human capital development.

Mvunga said the current sound macroeconomic environment, and existing policy framework gives Zambia an avenue to translate growth into tangible human development outcomes in an integrated manner.

As part of the Annual Ministerial Review, four countries – Zambia, Kyrgyzstan, Mongolia and Philippines – will make National Voluntary Presentations on their progress in implementing the internationally agreed development goals, including the MDGs, and the transformation to the Post-2015 Development Agenda.

Zambia UN Mission Chargé D'Affaires Christine Kalamwina, ministry of finance director of national planning Chola Chabala and principal planner Pamela Kauseni accompanied the deputy minister to the meetings. Ahead of the National Voluntary Presentation, Mr. Mvunga separately met and exchanged views with US Mission to UN Acting Representative to the Economic Social Council (ECOSOC) Ambassador Richard Erdman and Swedish Mission to UN diplomat Daniel Pettersson.

Sweden and US will review Zambia’s presentation.

This is according to a statement made available by First Secretary for Press at the Zambian Mission at the United Nations, Chibaula Sil

OECD, UNDP to boost tax collection in developing countries

By Mutale Kapekele

A new initiative that will help developing countries like Zambia to bolster domestic revenues by strengthening their tax audit capacities has been launched by the Organization for Economic Cooperation and Development (OECD) and the United Nations Development Programme (UNDP).

The Tax Inspectors Without Borders (TIWB) project, which will help countries mobilize domestic revenue in support of the post-2015 Sustainable Development Agenda (SDGs), was announced on July 13 at the third International Conference on Financing for Development in Addis Ababa.

Debt redden Zambia is one of the beneficiaries of the TIWB, which will facilitate targeted tax audit assistance in developing countries worldwide. Tax audit experts will work alongside local officials of developing country tax administrations to help strengthen tax audit capacities, including issues concerning international tax matters.

A number of pilot projects and international tax workshops are already underway, including in Albania, Ghana and Senegal. Evidence gathered from real time cases in Colombia indicate a significant increase in tax revenue, from USD 3.3 million in 2011 to USD 33.2 million in 2014, thanks to tax audit advice and guidance.

“The challenges faced by developing countries are being acknowledged internationally and we are delighted to mobilize the best experts worldwide in a practical contribution to domestic resource mobilization,” OECD Secretary-General Angel Gurría said during a launch event in Addis Ababa. “The new partnership between the OECD and UNDP on Tax Inspectors Without Borders will significantly extend the global reach of existing efforts to build audit capacity while sending a strong message of international support to developing countries.”

And UNDP Administrator Helen Clark said "effective domestic resource mobilization is at the core of financing for sustainable development but efforts to raise domestic resources are often constrained by tax evasion and avoidance, and by illicit financial flows.”

Clark explained that the Tax Inspectors Without Borders programme is an “innovative and practical way of supporting developing countries to mobilize more domestic resources for development.” She added that with its country level presence and local knowledge, UNDP is well-placed to partner with the OECD and the best audit experts to scale-up this important work.

A dedicated central organizing unit, the TIWB Secretariat, supported by an oversight board of stakeholders, will operate as a clearing house to match the demand for auditing assistance with appropriate expertise. The Secretariat, composed of OECD and UNDP staff and based at the OECD in Paris, will facilitate full-time or periodic deployment of experts.

A TIWB Toolkit sets out guidelines for establishing TIWB programme and protecting against potential confidentiality and conflict of interest concerns.