Africa Water, Sanitation & Hygiene September 2018 Vol.13 No.4 | Page 24

Agriculture Financing
Afbd Offers New Financing Opportunities for Zambia’s Water and
Agriculture Sectors
A
n African Development Bank
team of experts visited Zambia
from 23 to 27 July to identify
businesses in the nation’s water and
agriculture sectors eligible for new
financing mechanisms it is offering to
the southern African nation.
The team, led by Martin Fregene,
Director of Agricultural Infrastructure and Wambui
Gichuri, Director of Water Development and Sanitation
met senior government officials from the Ministries
of National Development and Planning, Agriculture,
Livestock and Fisheries Development, Environment, Water
and Sanitation, to discuss the policy framework for non-
sovereign financing of agriculture and water resources
management programs, using alternatives to public loans
with government guarantee.
The team also held talks with private-sector actors including
the Millers Association, Chamber of Commerce and
Industry, Poultry and Dairy Associations, Grain Traders
Association, Bankers Association, Multi Facility Economic
Zone, Musika, and the Zambia Development Agency. In
addition, the team met with development partners, water
companies, water services regulator (NWASCO) and water
resources authority (WARMA).
Currently, the Bank’s supports Zambia’s water sector via
government guaranteed sovereign loans and grants to
the water and sanitation services. The water companies
continue to face challenges in growing their businesses
through extension of services to many of the newly
developed areas.
The Bank is offering non-sovereign financing to the water
companies for the last mile. Under the NSO instrument,
the Bank will support 33% of the program cost, while
other financiers and the client would cover the rest with
a tenure of 15 years and a grace period of 5 years. The
terms are competitive, giving the water companies the
much needed boost for the last mile connectivity, storage
and augmentation of supply. With all the studies and other
requirements in place, the Bank can conclude project
financing and approval within six months.
Zambia’s water companies, the state water regulator
NWASCO, and the government, welcomed the instrument.
Each of Zambia’s three water companies have potential
projects of over US$120 million. The companies will
work on the feasibility studies and designs prior to seeking
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Africa Water, Sanitation & Hygiene • September 2018
non-sovereign financing from the
African Development Bank. The
water companies are expected to
strengthen their governance and
performance to better utilize and
service the financing. The Lusaka,
North Western and Nkana water and
sewerage companies committed to
work on potential projects for financing under this window
The Bank’s support to the agriculture sector will be private
sector-led. The Bank will support Zambia to reform its
agricultural trade policies that allow for private sector
participation in export of agricultural commodities.
Additional investments, under the African Development
Bank’s Transformation of African Savannah Initiative
(TASI) would leverage on private sector financing to
develop public-private projects that connect smallholder
farmers to the higher end of agricultural value chains.
Zambia Agriculture Statistics
According to the World Bank, in
2013, Zambia agriculture sector’s
aggregated value was USD 4.028
billion, accounting for 18% of the country’s GDP, estimated
at USD 22.38 billion.
Agriculture generated 10% of Zambia’s foreign exchange
earnings in 2011.
In 2010, Zambia’s agriculture sector confirmed itself as
the country’s first employer, providing jobs to more than
3,042,000 people corresponding to 66.5% of the country’s
labor force.
Zambia territory is 75 million hectares (752,000 km2) large,
of which 58% (42 million hectares) is classified as medium
to high potential for agriculture production.
Around 15% of this land is currently under cultivation.
Overall, the climate is favorable to agriculture: Zambia’s
climate is classified as mostly tropical, with small parts of
its territory classified as semi-arid.
Average temperatures are comprised between 17,5 and 25,5
C° while average rainfalls are comprised between 0 and 200
mm per month, during the 2 rainy and dry seasons.
Zambia is a landlocked country, but thanks to its numerous
rivers, lakes and underground water resources, the country
concentrates 40% of Southern and Central Africa’s water
resources on its own.