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18 - 20 November 2024 | Victoria Falls, Zimbabwe 

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18 Oct 2024

Towera Temba-Nkanza, EY Zambia, on Green Bonds, Carbon Credits, and Why Dialogue Between the Public and Private Sector Needs to be Transparent, Candid and Accountable

Towera Temba-Nkanza, Associate Director, EY Zambia

Towera Temba-Nkanza is currently Associate Director at EY Zambia, providing strategic advice to clients on cross-border tax issues, managing risk and optimising investment structures.  

In the course of her career, Towera has worked on both public and private sector projects, advised on international tax transactions in Africa and the Middle East, and worked on some of the largest energy transactions in East, West, and Southern Africa. Towera is a moderator at the Zimbabwe-Zambia Energy Projects Summit 2024


EY advised on the first-ever green bond listed on the Lusaka Securities Exchange – a major landmark for Zambia. Can you tell us about this?   

We were transaction advisors to the first Green Bond issue on the Lusaka Stock Exchange for Copperbelt Energy Corporation (CEC) for their renewable energy projects.

Fundamentally, we provided assurance to the investors that the project was bankable and credible, and that it was supported by seasoned local experts and would continue to be supported. It was very successful. The first tranche of the US$200 million was oversubscribed by over 178 percent. 

We become very close to CEC. It’s an indigenous Zambian company and we are very proud of it.

It’s also worth mentioning that we launched the second edition of the EY Zambia Sustainability Report in May.  This assessed and evaluated the 2023 performance of listed entities on the Stock Exchange against ESG metrics for sustainability reporting – and CEC performed really well.

I have no doubt that this contributed to the oversubscription of the Green Bond issue last year.

 

Zambia has established ISSB standards as law. How significant is this for investors? 

The ISSB Standards establish a high-quality global baseline of investor-focused sustainability-related disclosures.

Listed companies have already been following ISSB sustainability reporting standards and will continue to do so until the end of this year, but now, our local accounting regulatory institution, Zambia Institute of Chartered Accountants (ZiCA), has adopted those standards and made them mandatory for publicly accountable entities from January 2025.

This is indicative of the importance of ESG to Zambia, which, in turn, will be very important to investors. 

There are also UN-supported projects aimed at developing a local taxonomy that will define specific metrics tailored for Zambian companies, allowing their performance to be evaluated against ESG criteria. 

This helps create a level playing field. Since the ISSB standards are based on European frameworks, having our own performance metrics would ensure fairness for companies operating in Zambia. 

 

EY has been contributing to discussions on carbon credit trading too. This is a subject close to your heart.

EY plays an influential role in the energy sector and in various ongoing projects.

As transaction advisors, we are actively involved in energy security discussions and typically advise throughout the entire investment cycle of energy projects – from development to commissioning and operation.

Beyond transaction advice, we also advocate for an investor-friendly environment and policy reform.

Recently, we have been contributing to fiscal policy discussions related to carbon credit trading, a topic I’m personally passionate about.

 It’s early days for Zambia in terms of regulation.  But there are projects that have been running for over five years, and the government is working to adopt international best practice, which in some jurisdictions allows investors to own carbon credits.

However, there is a focus on maintaining a balance to ensure that local Zambians are not disadvantaged.

Ongoing discussions reflect differing views: some oppose the idea of investors earning carbon credits generated in Zambia, arguing that credits should belong to Zambians, with investors only having rights to purchase them.

We are still in the policy formulation stage. I’m confident that by considering what neighbouring countries like Kenya have done with carbon credit trading, we can strike a healthy balance. 


What do you see as the challenges and opportunities right now for investors?

The cost of capital can be a challenge. With hydro projects, climate change is reducing or slowing down the return on investment. Expanding regulatory obligations can also increase the cost of doing business. Plus, the transmission and distribution of power is managed by a sole system operator.

But while there may be challenges, there are many opportunities.

In the public/ private partnership space, the government is very open to business with the private sector.

Plus, we are seeing a lot more opportunities in smart grid technology and different energy pricing mixes. 

 
You are moderating on the industry debate on the role of hydro projects at the Zimbabwe-Zambia Energy Projects Summit 2024 – what would you like to see come out of the debate?

Hydropower has been a vital energy source for sub-Saharan Africa for decades, but it is increasingly vulnerable to climate change. 

We need to find ways to deal with this risk because, for an investor, it drives up costs of doing business and slows down the return on investment. I’d like to explore whether hydropower is still the best option moving forward.

Should we continue relying on it as our primary energy source?

If so, how can we deal with the challenges we face here in Zambia?

These include issues that might relate to technical difficulties and plant efficiencies – not just climate change.

I can’t wait to hear how Zimbabwe is handling similar challenges, as we often address these problems in isolation.   
  

How do you see the role of climate finance in the mining sector?    

Climate finance is essential for many reasons (and again, I'll focus on carbon credit trading).

While mining can be associated with environmental degradation, it also presents an opportunity for the sector to invest in sustainable practices, and one of the ways is to set its carbon emissions.

If mining companies invest in carbon credit trading, for example, buying and selling their credits based on their emission reductions, it could incentivize them to lower their carbon footprint and invest in projects that enhance sustainability.

Mining also uses a significant amount of water.  How can it be recycled and used sustainably in the mines? This could reduce costs as well as environmental impact.  

Carbon credit trading aligns very well with the sector.  If the government appreciates the potential revenue generation, then certainly there will be policies in favour of mining with respect to climate finance.  

There is much to be discussed on this topic, and I look forward to attending the session on Day 2.

 

What excites you most about the summit?

I love the fact that it will provide a platform for dialogue and interaction between the public and private sectors, allowing both sides to be transparent, candid and accountable.

This is a chance to forge valuable connections, learn from one another, and fundamentally work towards a sustainable future.

I'm looking forward to hearing the discussions, especially around hydropower, as this is particularly controversial.

I'd like to hear from the government and ZESCO on eradicating the energy deficit, emergency tariffs and power imports.

We need long term solutions, and the government needs to engage with the private sector to be able to come up with these solutions.

I'm really looking forward to it.

 

The Zimbabwe-Zambia Energy Projects Summit 2024 takes place 18–20 November 2024,  at Victoria Falls, Zimbabwe.    

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