Climate Story Jeffrey Gogo
Zimbabwean banks have lined up funding for climate projects in a big way. Much of the money is earmarked for projects that curb carbon emissions through renewable energy use in homes, universities, farming and businesses.
A total of $220 million has been mobilised – or is at the point of being raised — by the Infrastructure Development Bank of Zimbabwe (IDBZ) and Steward Bank for this purpose and more.
Two years ago, ZB Financial Holdings Ltd was toying around with the idea of spending up to $100 million building a mini-solar electric station to power university education.
The dream remains, but what the banking group has actually done is to help 3 000 families in Marondera connect to the electricity grid for about $100 000.
ZB paid the entire fees of connecting the 3 000 new houses from Rusike to the grid, and will recover its money over a period of time from levies paid each time the faimilies buy electricity via the prepaid meter.
The group has also built a series of solar-powered street lights at Chinhoyi University of Technology and the Midlands State University.
“We are trying to source funding for the project (mini solar station),” ZB Financial Holdings chief executive, Ron Mutandagayi, told The Herald Business, by phone.
“Some of the equipment needed is imported, so there is a foreign currency component that is required. We are in engagements with institutions like the IMF, the World Bank and a company that supports solar activities called Canada Solar,” he said.
Mutandagayi explained that the project was still at “early stage, but the fact that we have got an off-taker who is interested means that we can now more aggressively speak to financiers to see what model of funding we can get, to get the project off the ground”.
At IDBZ, the bank has recommended seed capital of $70 million for its Climate Finance Facility, but that figure could rise depending on the outcome of ongoing feasibility and environmental studies that seek to clear out issues around the actual amount of debt that needs to be issued for this purpose.
The bank is looking to fund two renewable energy projects — Odzani Mini-Hydro project in Manicaland province and the $71 million-valued Rufaro Solar near Marondera. Odzani is an existing hydropower station that generated around 2,4 megwatts of electricity before it was shutdown more than 60 years ago.
IDBZ wants to bring the station back to life, with capacity to generate up to 3,6MW, that is to be fed onto the main national grid. To do that, the bank intends to rehabilitate “weirs, penstocks, canals and construction of a powerhouse (including turbines)”.
The Rufaro Solar electric power plant targets to produce 50MW of electricity initially, on 100 hectares, which can be scaled-up to 100 megawatts on much bigger land — all to feed a national grid that depends on fossil-based imports to cover up a third of the domestic shortfall.
The plant “will comprise individual solar panels connected into several strings.
“These strings will be connected in parallel into an inverter. The inverter then optimises the energy yield of the solar feld, converts to alternate current and stabilises the voltage,” says the IDBZ.
Steward Bank is understood to have unveiled $150 million to bankroll projects in renewable energy for domestic and business use.
At press time, we had yet to establish specific detail relating to this fund
Zimbabwe accounts for just 0,45 percent of the global emissions total, but in the spirit of curbing global temperature rise to under 2 degrees Celsius, the country intends to cut emissions by 33 percent by 2030, if it receives international financial support to achieve those target.
But global funding hasn’t been trickling in at the desired scale for many reasons, including a lack of bankable project, rigorous funding requirements by global financiers, a lack of adequate climate finance at the global level, wrong politics and other issues.
For example, by June 2013, Zimbabwe had received just $6,7 million or 0,7 percent of the $964 million climate funding accessed by nine other economies in Southern Africa, due in part to the absence of a clear-cut implementation strategy.
It will cost about $55 billion to mitigate climate change in Zimbabwe over the next 12 years, the Government says in its climate plan to the Paris accord
In 2017, climate financing by the world’s six largest multilateral development banks rose about 20 percent year-on-year to $35,2 billion, but much of it never found its way to Zimbabwe – if not for obvious political reasons, then for one reason or another.
The country still has some work to do (even though so much has been done already) before it can receive funding from the Green Climate Fund — or any other related UN climate financing mechanisms.
So, domestic sources of funding, both public and private, are seen as key to helping Zimbabwe meet up with its own goals of limiting climate damage while improving economic output and bettering livelihoods.
Obviously, global targets under Paris will be tackled within the underlying domestic interventions.
Climate funding from banks, therefore, remains particularly important for sustainable infrastructure investment within the context of mitigating against, and adapting to climate change.
External finance — both public and private — will also feature and can help catalyse domestic investment, others say.
Although Zimbabwe’s mitigation plan under the Paris Agreement is almost completely reliant on foreign funding, it is a good thing to see banks stepping in.
That works only if everything else is working well, however.
“Before cash became a problem, we were in the process of trying to convert our ATMs to some sort of renewable energy base, but now that there is no cash ATMs are not as busy so we have decided to put that on the back,” said Ron Mutandagayi, the ZB Financial Holdings chief executive.