LUSAKA 27th October 2021 – World Wide Fund for Nature Zambia (WWF), ZANACO and Kukula Capital today signed a Letter of Intent to collaborate on the implementation of programs aimed at developing a green economy for Zambia. Key to the letter of intent is the establishment of a ZMW 1 billion Green Outcomes Fund that will invest in scalable small and medium sized businesses that seek growth capital, are committed to make the transition to green production practices and the creation of green jobs. The fund will target to invest in projects that are green and bankable in the following thematic areas: climate resilient agriculture, sustainable forestry, cleaner energy sources, and sustainable use of natural resources. Subject to regulatory approval, the governance and operational structure of the fund will be operational by June 2022
According to WWF Zambia Country Director Nachilala Nkombo, “This exciting partnership between WWF Zambia, Zanaco and Kukula Capital responds directly to the threat of climate change and environmental degradation faced in Zambia’s economy today. This fund will simultaneously support the growth and green ambition of SMEs by assisting them to mitigate these environmental risks, while delivering business and social returns to their shareholders, communities and customers ”
Commenting at the signing ceremony, Zanaco Chief Executive Officer, Mukwandi Chibesakunda said” The protection of the environment is everyone’s responsibility and it goes beyond climate change, it’s about what we deliberately do, for future generations to have a safe planet to live in. It is for this reason that as a financial institution, we have taken the step to provide the anchor funding for the Green Outcome Fund.”
WWF and Zanaco are the key sponsors of the Fund and have retained Kukula Capital to manage the fund on behalf of the partners and investors. Kukula Capital is a leading SME fund manager in Zambia regulated by the Securities and Exchange Commission. WWF will further provide technical assistance to the fund and to investees to achieve the environmental targets outlined in the investment policy. Zanaco as the financial services partner and key sponsor has committed K10 Million towards the first closing of the fund.
“Zambia is well positioned to become a leading green investment destination in Africa and has competitive advantage through its rich endowment of natural resources. We are excited to launch the fund which will create positive social and environmental impact”, commented Tue Nyboe Andersen, Managing Director, Kukula Capital Ltd.
While Zambia is home to 14 ecosystems and over 12,000 identified plant and animal species, these natural assets are threatened with degradation and extinction. Recent climate change predictions suggest variable weather systems could increase the frequency of droughts and floods and thus affect food and energy security of the country. Instruments such as the Zambia green outcomes fund will help enterprises, communities and ecosystems to adapt and build resilience to create a nature positive and climate smart economy by 2030.
The fund’s primary objectives are to create +5000 green jobs directly and indirectly, mitigate climate change, improve water and waste management as well as sustainable agriculture in Zambia by 2030. The Fund addresses the challenge of access to finance, climate change and environmental degradation facing emerging businesses in the green sector. The fund is aligned with UN’s Sustainable Development Goals (SDGs) and will mobilise local and international funding in supporting these global goals. The fund creates a partnership opportunity for Development Finance Institutions and Impact investors to reach the category of businesses driving the green growth and the green jobs agenda in Zambia.
The Zambia Green outcomes fund was inspired by the success of the South African Green Outcomes Fund pioneered by WWF South Africa under a similar constellation of similar partners that share a commitment to green development in that country. The Zambia Green Outcome Fund intends to be a catalytic finance partner of the South Africa Green Outcome Fund with an opportunity to benefit from the outcomes-based matched concessionary capital. The outcomes can include evidence of reduced footprint, reduced greenhouse emission, created green jobs and effective waste management by recipient businesses.
The signing of the letter of intent comes well timed, as countries around the world converge at the UN Climate Change Conference ( COP 26) in Glasgow, UK from 31st October -12th November 2021.
This conference is the first time that parties are expected to commit to enhanced ambition since COP21 and where international finance for adaptation and mitigation will be one of the principal topics of negotiation.
The three parties have taken the lead in greening the Capital Markets in Zambia.