Country: Zambia

Rethinking benefit sharing in African carbon projects

As the global carbon market evolves, the demand for high-integrity carbon credits is surging—credits that not only mitigate climate change but also deliver meaningful socio-economic and environmental benefits. Africa, with its rich natural resources and diverse communities, is uniquely positioned to lead this transformation. However, achieving this potential requires a shift towards more equitable benefit-sharing mechanisms that genuinely empower local communities.

In this report, we provide a comprehensive analysis of the critical role Benefit-Sharing Mechanisms (BSMs) play in ensuring that carbon projects deliver real value to those most affected. Through detailed case studies from Zambia and Kenya, we explore how traditional practices, community agency, and robust governance can be integrated into carbon projects to maximize their impact.

This report offers actionable insights for policymakers, project developers, and investors seeking to build an African-centric approach to benefit sharing—one that not only attracts investment but also fosters transparency, accountability, and fairness. By rethinking benefit sharing, Africa can unlock its carbon potential, create sustainable development opportunities, and contribute to the global fight against climate change. Join us in exploring how we can collectively pave the way for a more just and sustainable future.

Zambia’s Capital Markets Master Plan 2022

Capital markets are essential for economic development and like in many countries, the markets have the potential to make a significant contribution to Zambia’s economic development. This intervention is timely and shall be instrumental in catalysing Zambia’s economic recovery and transformation, especially at a time when the country’s macro-economic fundamentals have demonstrated resilience in the face of increasing global socio-economic uncertainty. The economy is estimated to have contracted by 2.7% in 2020 due to the covid-19 pandemic. However, the economy displayed its resilience and the GDP growth rate averaged 4.1% between 2021 and the first half of 2022. In addition, the inflation rate reduced from 21.5% at the beginning of 2021 to 9.7% in October 2022, while the Kwacha for a unit of a dollar appreciated by 26% relative to 2021.

Notwithstanding, the country’s debt position remains unsustainable. Positive strides have however been made in this regard, with the IMF approval of an External Credit Facility (ECF) of $1.3 billion to dismantle the debt arrears. In recognition of this, the plan aims to contribute towards the development of Zambia while remaining cognizant of the country’s current realities. As a recent report from the International Organisation of Securities Commissions (IOSCO) notes, “deep, liquid, and well-regulated capital markets are instrumental in financing the economy and are the foundation for a thriving private sector – a key driver of job creation and growth”. Hence, the plan has been developed in line with the aspirations of the 8th National Development Plan (8NDP) as well as successor plans and Vision 2030. These aspirations include, among others:

This plan sets out an integrated national financing framework and notes that “financing the 8NDP will require policies, partnerships and an enabling environment that effectively mobilises and uses public finance and promotes impactful private finance”.2 The objective of this Capital Markets Master Plan (CMMP) is to ensure that Zambia’s capital markets, alongside some similar sectors in the plan, make their contribution to help Zambia realise its potential

8NDP

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SADC green finance demand study

Africa is under pressure to develop its green finance market for two crucial reasons. The first is to significantly and sustainably respond to climate change, as the continent is vulnerable to the severe effects of climate change. Secondly, African private and public sectors lag behind other emerging markets in green (and sustainability) bond issuances. The SADC Green Bond Programme serves to address the aforementioned challenges in general, and in particular, the embryonic status of the green finance market in the SADC region.

Since its official launch in March 2021, the Programme has made commendable headway in implementing its core strategic objective of developing the green bond market in SADC – which is demonstrated by the publishing of this SADC Green Finance Demand Study. Considering that the development of the capital market ecosystem depends on timely empirical information, the importance of this study cannot be overstated. Not only does it bridge the existing knowledge gap regarding green investmt opportunities and barriers in the SADC region, but it is also underpinned by one of CoSSE’s mandates, which is to encourage the transfer of securities markets’ intellectual capital and technical expertise among member Exchanges of CoSSE.

Payroll lending review – Zambia

This report documents the results of an assessment of the payroll lending sector in Zambia. The study was commissioned by FSD Africa on behalf of the Bank of Zambia and was carried out between July and November 2014. The study forms part of a broader theme of work initiated by FSD Africa on credit markets within the region.

The study aimed to understand and quantify the extent of systemic and operational risks that may have arisen as payroll lending in Zambia has grown in prominence. Based on data collected from the largest payroll lenders, the research estimates that payroll loans now account for one-third of all Zambian banking system loan value, up from 25% at the end of 2008. Personal loans, driven by payroll loans, have been the largest contributor to commercial bank loan portfolio growth every year since 2011, accounting for just under one-third of the total growth of the Zambian credit markets between June 2010 and June 2014.

Yet even though payroll lending is a key driver of Zambian credit market growth, information is scant and oversight and regulation is limited.

Given the growing exposure of banks and micro-finance institutions (MFIs) to payroll lending and the concentration of portfolio growth within particular market segments the assessment raises significant questions about the operational and systemic risks that have already been introduced into the Zambian financial sector, or that could become risks in the future.

Reducing costs and scaling up UK to Africa remittances through technology

The objective of the report is to assess whether the appropriate application of ‘new’ technologies could be leveraged by donors and other development agencies to increase formal remittance flows into Africa and/or reduce the cost of sending money home.

Fragile and conflict-affected states (FCAS) are of particular interest given the importance of remittances to livelihoods and post-conflict development, as well as the exacerbated challenges that are often faced in these jurisdictions.

The art of market facilitation: learning from the financial sector deepening network

Market facilitation (M4P) is an approach to promote systemic change—change that goes beyond individual players and that is relevant to the wider environment, affecting many. Market systems development requires that organisations play a facilitating role. Standing outside of the market system, facilitators work with different players within the system, to make it work more effectively. Their essential role is active and catalytic, to enable others to do rather than do themselves—stimulating changes in a market system without becoming part of it.

Understanding this concept and applying it in market systems development initiatives is no mean feat. Market facilitators, donors and practitioners must draw from a wide range of tools and techniques to put market facilitation into practice. Developing and maintaining partnerships, managing risks, deploying flexible intervention tactics, establishing a measurement system and communicating effectively are all useful learning points for those working in this field. Knowing when to exit an intervention is just as critical as identifying and selecting the right partners to work with and understanding these complexities can have an impact on the effectiveness of interventions. Market facilitation as a practice is more of an art than a science, directed by principles rather than lists of actions, which can make it difficult to translate the theory into practice.

There is limited evidence from the field on how to apply this approach in a way that ensures interventions are both scalable and sustainable. In June 2015, FSD Africa commissioned the Springfield Centre to produce: a) one
comprehensive case study of FSD Kenya—a financial market facilitation agency in Nairobi, Kenya; and b) six minicase studies of financial market facilitation interventions from the wider FSD Network, by the FinMark Trust, FSD Kenya, FSD Tanzania and FSD Zambia. The aim of this process was to build the knowledge base around the art of market facilitation in the field. These case studies revealed a lot of insights about effective market facilitation, the challenges the Financial Sector Deepening (FSD) Network faced while designing and delivering interventions using the M4P approach and the lessons they have learned so far.

The M4P synthesis paper (this publication) explores the art of market facilitation in action through the lens of the FSD network and synthesises learnings gained from these case studies to build understanding around the M4P approach. The paper examines the wider lessons and challenges that emerge for organisations addressing the dilemmas of developing financial markets for the poor and how they differ significantly from other conventional approaches.

Reducing costs and scaling up UK to Africa remittances through technology

The objective of the report is to assess whether the appropriate application of ‘new’ technologies could be leveraged by donors and other development agencies to increase formal remittance flows into Africa and/or reduce the cost of sending money home.

Fragile and conflict-affected states (FCAS) are of particular interest given the importance of remittances to livelihoods and post-conflict development, as well as the exacerbated challenges that are often faced in these jurisdictions.

Zambia aims to be financial hub, as Hichilema unveils first ever 10-year Capital Market Master Plan

Posted on by TIMOTHYRADIER

President Hakainde Hichilema has unveiled Zambia’s first ever 10-year Capital Market Master Plan (CMMP) meant to among others, spearhead development of green bonds.

Government has in the Eighth National Development Plan (8NDP) earmarked capital markets as a critical success factor in achieving the objectives of the plan.

According to President Hichilema during the launch of the plan on Thursday in Lusaka, the CMMP had special focus on the development of new and innovative products on markets such as green bonds.

Zambia’s aspiration, he stated, was to become a financial hub that would seek to attract financing, including green bonds

He said this in a speech read for him by Finance and National Development Minister, Situmbeko Musokotwane.

“Under this pillar, the plan motivates for the introductions of innovations such as green bonds, private equity, and virtual capital among others. “This focus area creates an opportunity for the developing products that allow access to capital by Micro, Small and Medium Enterprises through mortgage refinancing,” Hichilema said.

He said another area of focus was improving the traditional security markets which included the stock market, corporate bond markets and collective investments scheme.

He said the CMMP was a comprehensive long term strategy which sets out the primary framework for Zambia’s capital markets development over the next 10 years.

“The plan will ensure that Zambia is an attractive destination to not only local but also foreign investors. The capital markets in Zambia were primarily established to stimulate a dynamic private sector. “I am optimistic that the launch today signals our resolve to set in motion the necessary interventions required to fully develop our capital markets as they are essential for creating employment for the youth,” Hichilema said.

Speaking earlier, Securities Exchange Commission (SEC) Chief Executive Officer, Phillip Chitalu said the launch of the CMMP signified that the market developmental efforts will change in to a fast pace moving train.

Chitalu urged the market players to contribute to achieving even further and greater success in the market contribution to economic development.

“This capital markets journey will not end here but should be carried on by those who will take over from us. I think 10 years is a long time. “For capital markets to have intended impact on our economy the common goal should have the capital markets taken to a level where these financial markets are enablers and cane be used to mobilise and channel in an efficient manner funds to the greatest economic impact,” he said.

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