Zambia is proposing a financing framework to mobilize domestic resources for climate resilient programs that support vulnerable communities. The framework involves establishing a National Catalytic Fund to unlock private sector financing for essential oils and biofuels value chain programs. These programs are expected to economically empower rural communities through job creation, alleviate poverty, and promote conservation. The financing strategy utilizes a risk mitigating approach and pools various funding sources into a liquid fund to leverage domestic financial resources and support agricultural value chain projects.

1. ZAMBIA’S PROPOSAL FOR MOBILISING FINANCE
FROM DOMESTIC FINANCIAL MARKET FOR CLIMATE
RESILIENT PROGRAMMES TO SUPPORT
VULNERABLE COMMUNITIES
By
Lloyd Chingambo
Revolutionalising Finance for Agri-Value Chains
Nairobi, Kenya
July 14-18, 2014

2. Overview
 Since independence in 1964, Zambia is still
exporting unprocessed copper
 Rampant unemployment
 Serious imbalance in wealth distribution
 Rampant rural poverty with only urban pockets
of development while the rest of the rest of
Zambia has been left behind.
Government is seeking to remedy this
situation

3. CONSEQUENCES OF RURAL
POVERTY

4. POVERTY RELATED
SITUATIONS
HOW DO WE TRANSFORM
PEOPLE TO THESE?

5. Livestock induced siltation
Shifting cultivation
POVERTY RELATED SITUATIONS HOW DO WE GET PEOPLE TO
CHANGE TOTHESE?

6. Biofuels/Essential
Oils Programmes
expected to
minimize
deforestation and
would engender
economic
empowerment
among the rural
poor.
POVERTY RELATED SITUATION ALTERNATIVE ECONOMIC
ENGAGEMENTS

7. Economically empowered Rural
poor will conserve Wildlife
POVERTY RELATED SITUATION ALTERNATIVE ECONOMIC
ENGAGEMENTS

8. VISION AND TRANSFORMATION PROGRAMMES
• Set up a National Catalytic Fund.
• Building a Catalytic Private Sector Financing
Mechanism through and use it to:
 Unlock the domestic financial market and
private sector
 Proactively “grow” the private sector to spur
growth and development in the country
 Financing as a vehicle for rural economic
empowerment of citizens
●
Essential Oils Value Chain Programme
●
Biofuels Value Chain Programme.

9. BIOFUELS AND ESSENTIAL OILS
PRODUCTION VALUE CHAIN

10. IMPORTANCE OF BIOFUELS AND ESSENTIAL OILS TO
ZAMBIA’S RURAL DEVELOPMENT
• It is an “All-Included” Economic Empowerment Industry
capable of creating jobs and wealth for All in the long run
• Improves Climate Resilience and Security,
• Promote Rural Development,
• Promote Agriculture Development and enhance food
security,
• Create jobs and alleviate poverty,
• Economic Empowerment among citizens,
• Enhance Environmental Conservation and mitigate climate
change,
• Foster technological development, etc.

11. GROUND-BREAKING FEEDSTOCK
PRODUCTION

12. AGRO-ECOLOGICAL MAP AND CROPS
SUITABILITY
FROM: Agriculture Sector Profile 2011

13. Sweet sorghum
4 – 4.3 months
All Zones
Cassava
10 - 12 months
Mainly Zone III
Molasses
Available
Moringa
24 - 36 months
All Zones
Soybeans
4.5 - 5 months
Mainly Zones IIa & III
EXAMPLE 1 – BIOETHANOL FEEDSTOCKS
EXAMPLE 2 - BIODIESEL FEEDSTOCKS
13
Jatropha
24 - 36 months
All Zones

14. PROVINCIAL COOPERATIVE UNIONS
FEEDSTOCK SUPPLY NETWORK
POPUs
PGPGPG PG
FF F F
GBNLPCU
DISTRICT COOPERATIVE UNIONS
IntegratedandCertifiedMarketStructure
anchoredinto:PPCR,ZABS,NTBC,NISIRand
HerbariumNDO
CatalyzingCottageIndustries
(DevelopmentofValueAddition
Infrastructure)

15. PROPOSED FINANCING FRAMEWORK
FOR BIOFULES AND ESSENTIAL OILS
PROGRAMMES

16. PILLARS OF THE PROPOSED FINANCING STRATEGY
The Proposed Financial and Investment Framework is
anchored into five (5) interlinking Strategies, namely:
• Based on an “Off-Balance Sheet” Funding Strategy”
• Incorporates a robust Risk Mitigating Framework
• Creation of a Liquid Fund as the vehicle through
which projects are processed
• Deployment of the Liquid Fund to leverage
domestic financial sources
• Adopted the Pooling and Blending Strategy.

17. Investors | Lenders
Money
Bonds,
Instruments,
etc.
CATALYTIC AND RISK MITIGATING FINANCING FRAMEWORK
Government
Funding
Grant
Financing
Sources
Concessional,
Commercial,
etc.
CATALYTIC
Fund Programmes
&Projects
Treasury Management
Specialized Service
Providers

18. FEATURES OF THE FUND
• Innovative domestic funds mobilisation framework
• Structured to pool and blend different sources of funds
• Permanent Liquid Fund capable of mobilizing finance from
both “donors” and domestic financial sources, at any scale
• Capable of facilitating or supporting investment
opportunities with different risk profiles
• Embodies venture capital characteristics
• Capable of supporting:
●
Projects
●
Programmes
●
Companies
●
Local Authorities
●
Central Government (Sovereign Fund).
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

19. KEY FEATURES OF THE FUND, Cont/…
• Flexible and “continuously growing” pool of funds
• The Fund is capable of:
●
Lending
●
Borrowing
●
Creating its own money through treasury management of
the pooled funds
●
Extending grants:-
●
Productive Social programmes and projects
●
Smallholder projects and programmes.
• Risk mitigation vehicle capable of:
●
Extending credit enhancement
●
Extending credit guarantees.
Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

20. PRODUCTS AND SERVICES
• Agricultural Value Chain Financing
• Credit Enhancements
• Credit Guarantee
• Loans
• Share Acquisition
• Bridge Financing
• Trade and Supply Chain Finance
• Leasing of Equipment
• Blended Finance
• Structured Finance
• Underwriting Business Support
• Infrastructure Financing
• Etc.

21. RISK MITIGATING FEATURES OF THE FUND
• Government Programmes (PPP)
• Guaranteed Market
 Government Off-take Agreement
• Product is Measurable
• Specified Standards
 Meets Specific Standards
• Supported by a Liquid Fund
• Inputs are specified and quantified
• Supported by necessary specialized service providers
• Etc.

22. MANAGED PERFORMANCE AND RISKS INSTITUTIONAL
COLLABORATION
Specialized /Professional Services
1. Operational
2. Technical
3. Financial Planning
4. Management
5. Strategy support
6. Risk management
7. Marketing
8.Out-grower Systems
9. Infrastructure
10. Governance
11. Standards
12.Asset Management
7. Etc.

23. CONTACT DETAILS
Africa Carbon Credit Exchange
4th Floor, Godfrey House. Kabelenga
Road.
P.O. Box 390035
Lusaka. Zambia
lchingambo@africacce.com