Green finance is seen as part of good governance and integrity. Low enforcement of environmental and social regulations can lead to social conflicts (such as around mines and dams) and market impacts in losses to lenders and investors, and even macroeconomic stability risks. In order to prevent these, there is a need for the regulator to adopt due diligence requirements that seek to overcome weaknesses in environmental regulation and enforcement.

In Zambia, opportunities for green finance such as renewable energy, energy efficiency, agricultural development and SME productivity are potentially commercial. However, these opportunities are inadequately financed both because of barriers in demand for investment such as informality of enterprises, lack of asset registration, lack of financial literacy, corruption, policy uncertainty and because of barriers in supply such as unresponsive financial institutions, short-termism, lack of credit information, and lack of understanding of opportunities. Together with investment, extending insurance is essential for resilience to natural hazards.

Many of the barriers that constrain sustainable investment in Zambia are not specific to sustainable finance but are more general constraints to attract and allocate capital through the financial system. Inclusive green investment in Zambia is mainly constrained by short-term outlook in the investment chain, a fragmented institutional investor market and high returns to government bonds that tend to crowd out investments in other asset classes.

The need for green and sustainable investment is not an isolated issue but is linked to the critical challenge to meet infrastructure and energy needs, to improve health and to enable efficiency and access to finance [1].


Key policies and governance approach

Zambia, through the Ministry of Finance, recently finalized the country’s Capital Markets Development Master Plan (CMDMP) in which green finance instruments related to biodiversity conservation and climate change were successfully mainstreamed. The core objective of the CMDMP is to lay a framework for Zambia’s capital market development which will support economic development for over a period of 10 years. This will also help the country achieve its development agenda as outlined in the country’s 7th National Development Plan (7NDP) and the Vision 2030 which envision an environmentally and socially sustainable development trajectory that minimizes “environmental risks, such as shortage of water, air pollution and other effects.”

One of the core green finance instruments that is outlined in the CMDMP is the green bonds, which is one of the leading finance solutions that is being pioneered by BIOFIN Zambia together with its key stakeholders. The Green Bond Guidelines lay a foundation for the development of the green bond market in Zambia and attracts investments in projects that will help protect and even restore biodiversity. The CMDMP acknowledges that "the development of securities to finance green bonds is an essential step in building a broader suite of financial products, particularly as these products have the potential to drive infrastructure development as well as counteracting climate change impacts, which is one of Zambia’s overarching goals."

The launch of green bonds signifies the development of long-term debt instruments that will enable the country to raise additional funds for its developmental goals and green growth agenda with targets pointing to initiatives that have co-benefits between biodiversity conservation and climate change. 

BIOFIN Zambia's work to mainstream biodiversity into Zambia’s financial sector has created a number of other finance solutions besides green bonds which are already being planned for implementation beginning in 2021 through to 2025. These include the development of a green finance policy and tagging/reporting systems for the financial sector [2].

In recent years, Zambia has been successful in accessing many of the dedicated international climate funds that exist today. This includes the Pilot Programme on Climate Resilience (PPCR), the Global Environment Facility’s Fourth replenishment, the Least Developed Countries Fund, and Germany’s International Climate Initiative [3].



The next step is to raise awareness of the green bond guidelines and rules among companies and investors, and to ensure the right incentives are in place nationally [4].


Initiatives and Development Plans

A Joint Programme (JP) is expected to develop and operationalise an Integrated National Financing Framework (INFF) in Zambia that will improve development financing to ensure that SDGs are actualized at national and subnational levels within its 7th National Development Plan. The key component will be to develop an SDG-aligned financing strategy to mobilize and effectively manage additional domestic and international resources, both public and private, seeking innovative financial solutions and broadening partnerships [5]


Goals and Ambitions

The CMDP envisages that Zambia will raise about $400 million in green bond issuances by 2030 [2].


[1], [2], [3], [4]

  • Advocate for the introduction of customized incentives for green bonds.
  • Raise awareness of the green bond guidelines and rules among companies and investors, and ensure the right incentives are in place nationally.
  • The African Guarantee Fund Green Guarantee Facility could be an efficient solution to finance environmentally friendly projects through partner financial institutions.
  • The financial system requires some improvement to decrease the prohibitive interest rates.
  • Support the establishment of a national tracking system for climate finance to guide investment decisions and aid coordination of Zambia’s climate change response. Such a system would also need to put in place mechanisms through which learning and evaluation of project activities could occur.
  • Provide additional technical assistance to support the Ministry of Finance in considering the linkages between mainstream expenditure and climate change.
  • Provide financial and technical support to establish sector-by-sector guidance, for the identification and development of climate change related projects. Participatory approaches could identify local-level as well as national-level needs, fostering collaboration in project development.
  • Invest in an incubation facility that supports climate change projects from inception to implementation. Providing finance at various stages of the project development cycle, an incubation facility could operate on the basis of demonstrated progress. Separate windows for large and small scale projects could be created, to ensure that a diversity of levels and scales of intervention are supported. The goal of such a mechanism would be to build capacity at the same time as supporting the emergence of a more viable set of projects that can attract finance from a greater diversity of sources.

[1] International Trade Centre (2017). Green Finance conference and training: Executive Summary.

[2] Bruno N Mweemba, BIOFIN (2021). Biodiversity finance steps into Zambia's capital market development plan. [Online]. Available:

[3] Federal Ministry for Economic Cooperation and Development (BMZ), Climate Policy and Climate Financing Division (2013). Understanding Climate Finance Readiness Needs in Zambia.

[4] Bruno N Mweemba, BIOFIN (2021). Green bonds: sustainable investments in Zambia becoming a reality. [Online]. Available:

[5] Joint SDG Fund (2021). Zambia’s Integrated Financing Framework for Sustainable Development. [Online]. Available: