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The Emerging Africa Infrastructure Fund (EAIF), a Private Infrastructure Development Group Company (PIDG), has committed to de facto underwrite US$50m of Zambia’s first US$53.5m green bond, to finance key solar infrastructure and support diversification of the country’s energy sector.

EAIF acted as the cornerstone investor of the bond issued by CEC Renewables (CECR), an affiliate of Copperbelt Energy Corporation Plc. (CEC), a private energy generation, transmission and distribution company listed on the Lusaka Securities Exchange (LuSE) since 2008. The funding will enable the development and growth of CECR’s clean energy portfolio, consisting of two solar PV plants, with a combined generating capacity of close to 100MW, and supports the company’s ambitions to provide over 200MW of renewable energy.

The renewable energy potential in Zambia is abundant, with solar resources becoming increasingly critical to leverage as rising temperatures and unpredictable rainfall impact energy production from hydropower – the country’s primary power source. Diversifying generation sources is essential for the long-term resilience of the energy sector. CECR’s bond, to be listed on the LuSE, progresses the country’s energy transition and builds on momentum in Zambia’s emerging solar power sector.

The ongoing development of low cost solar is symptomatic of an evolving energy market – opening up to private sector participation in generation, transmission and distribution. CEC is leading the sector’s modernisation, leveraging its extensive transmission and distribution network to power key sectors of the Zambian economy.

Issuance of Zambia’s first green bond via private placement, structured by Cygnum Capital, has attracted investor interest from local capital markets. Commitments from local banks and pension funds have been integral to recent financing of key infrastructure across the country and are a testament to a rapid response to being locked out of international capital markets.

EAIF was able to scale back its original commitment to USD 20 million following robust participation from private sector investors in the region, including commercial bank ABSA.

EAIF’s integral role in the issuance adds to a rapidly growing portfolio of anchoring bonds in markets across the continent. Most recently, the fund acted as a committed investor alongside the International Finance Corporation in launching West Africa’s first ever asset-backed security, increasing grid connections for citizens in Côte d’Ivoire’s rural areas.

Commenting on the transaction, Paromita Chatterjee, Investment Director at Ninety One, fund manager of the Emerging Africa Infrastructure Fund, said: “The willingness of a local and regional capital market to back an entirely new funding instrument highlights Zambia’s commitment to sustainably advancing its energy market. We are delighted to partner with CEC and act as the cornerstone investor, increasing investor confidence in a rapidly evolving sector.”

Commenting on the deal, Managing Director of CEC Plc, Owen Silavwe said, “we are thrilled to be the pioneers in Zambia of Green Bond issuance. The response from a wide spectrum of investors has been extremely positive and encouraging. We are thankful to our partners for the support and hard work exhibited during the entire green bond process. The successful issuance of this first Green Bond is not only a pivotal moment for the CEC Group, but for Zambia and its capital markets, marking a clear demonstration of alternative financing options for the much-required diversification of energy sources in our country. We remain keen on actualising our green energy ambitions and the issuance of this Bond is an affirmation of our commitment to actualising our flagship 200MW of solar energy”.  

James Doree, Head of Corporate Investment Banking at Cygnum Capital, said “We are committed to finding capital markets solutions for infrastructure and clean energy investment. EAIF has again proved to be a pragmatic and innovative partner, acting as Cornerstone Investors for Zambia’s first Green Bond and working hard to bring commercial investors into the programme. Many congratulations to CEC, as they roll out their renewables pipeline through this flexible and scalable structure.”