Zambia

Zambia is expected to suffer severe consequences due to climate change and is among the countries with an acute climate vulnerability. In fact, the country has already been experiencing negative impacts related to climate change, including extreme weather conditions such as severe and prolonged droughts, rising temperatures and important variations in rainfall patterns. As such, the country has developed in recent years a policy framework to address these challenges and implemented structural changes to the economy and its future growth path to reduce its greenhouse gas emissions and build up resilience and adaptability into the countrys economic, natural and social systems. For instance, Zambias Nationally Determined Contribution commits to reducing carbon dioxide-equivalent emissions by 25 percent by 2030 compared to 2010 base year emission levels. Conditional on reception of significant international support, the emissions reduction target may increase to 47%. In 2016, Zambia approved a National Policy on Climate Change that focusses on key economic sectors in terms of emissions (agriculture and forestry, energy generation, mining and tourism) and the response to climate change has been integrated into the countrys economic planning process that culminated in the approval of the Seventh National Development Plan. While significant initial steps have been taken to incorporate climate change into the national economic and social planning process, further work is needed to translate the broad goals included in these documents into detailed and actionable programmes and initiatives. Similarly, greater ambition and clarity is needed, especially in regards to the significant mining sector in the country as well as land use patterns, given the extreme climate vulnerability faced by Zambia. For instance, while Zambias National Policy on Climate Change recognises the elevated deforestation rates in the country, it places a relatively low emphasis on the contribution of deforestation to national carbon emissions. Similarly, there is not a clear strategy for dealing with the significant mining sector, a major source of the countrys foreign reserves.

In 2014, the government of Zambia approved the National Planning and Budgeting Policy in order to improve public sector responsiveness, transparency and accountability. A main feature of the policy the development of a more inclusive planning and budgeting process which increases the participation of stakeholders at all levels of governance. As part of this process, the government established several consultative and advisory structures. These the National Development Coordinating Committee at the national level and the Provincial and District Development Coordinating Committees at the sub-national levels. For instance, the National Development Coordinating Committee includes representation from the private sector, trade unions, civil society and faith-based organisations, academia and the youth organization. However, this consultative structure lacks a clear gender focus, a clear challenge for Zambia as it is categorized as a most gender unequal country in the 2019 UN Human Development Report. In addition, there is a lack of policy instruments to improve gender imbalances in the Area of corporate governance.

Zambias National Vision 2030 is a policy document which details countrys development roadmap and aspiration to become a middle income country by 2030. The Vision is implemented through a series of five-year National Development Plans, the most recent of which is the Seventh National Development Plan covering the period 2017-2021. Based on these commitments, the Zambian government has been active in recent years in integrating the SDGs into the national economic policy planning process and in more generally promoting discussion of the SDG agenda. For instance, the Parliamentary Caucus Committee on the SDGs has been instrumental in fostering and sustaining SDG engagement. However, despite a lack of formal bodies or incentives to compel or encourage private businesses to report on their contributions to achieve the SDGs, the government has in recent years extended its support to multi-stakeholder initiatives that support private sector involvement in contributed to the Agenda 2030. Notable among these is the Zambia Business in Development Facility. a platform created to engage the private sector to achieve the countrys Vision 2030 and the 7th National Development Plan. Additionally, the UNDP in Zambia has begun an engagement process with the private sector to facilitate their involvement in achieving the SDGs.

While Zambia lacks an official wealth accounting system or metrics, the country has shown an interest in developing natural capital accounting capacity through participation in initiatives to promote the use of alternative, capital-based accounting methodologies and frameworks. For instance, Zambia is a participant in the Government Dialogue on Natural Capital, a platform for governments to explore and strengthen their role in scaling up and mainstreaming the capitals accounting approach. The initiative was set up in 2017 by the Netherlands and Scottish governments and the Natural Capital Coalition, in collaboration with non-governmental organizations such as the Green Economy Coalition and the WAVES Program.

Despite significant financing needs linked to Zambias climate change mitigation and adaptation plans, green and sustainable finance remains a very small niche market in the country. The governments main priority in terms of developing and regulating the finance sector remains modernising and stabilising its banking sector in order to stimulate increased access to financial services to support economic growth, particularly in terms of access to capital for small and micro enterprises. In addition, the most recent 7th National Development Plan calls for harmonising various pieces of legislation governing the financial sector. Given the lack of maturity of the finance sector in the country green finance opportunities remain inadequately financed. Small, internationally funded initiatives have taken hold in Zambia, but need to scale up quickly in order to meet the many climate related financing needs of the country in the next several decades. For instance, the Green Climate Fund, the worlds largest climate fund that seeks to support developing countries achieve their Nationally Determined Contributions (NDC) is currently only funding 4 projects totalling $91 million in Zambia, a far cry from the 50 billion that the government has indicated as the estimated financing needs over the next 20 years. On a smaller scale, the Business Innovation Facility (BIF), funded by the UK Department for International Development, has piloted an initiative in Zambia to provide advice and technical assistance to business models that advance social and environmental objectives.

Despite facing important challenges in terms of strengthening its tax collection and enforcement system, Zambia has made some initial strides in terms of incorporating green and sustainable fiscal mechanism in recent years. For instance, in 2018, the government began implementing a feed-In-tariff programme in order to encourage private investment in small-scale renewable energy projects. In addition, government policy documents have called for the use of financial instruments such as weather-indexed insurance, carbon instruments and catastrophic bonds to enhance resilience and cover climate related risks. In this vein, the government has begun implementing a weather index insurance scheme, which pays indemnifications to farmers in case of severe weather conditions that affect their crops. While the government still subsidises fossil fuels, the latest National Development Plan calls for a gradual adjustment of fossil fuel prices to reflect their negative climate related and pollution externalities. Finally, the government waived import duties and value added taxes for green equipment and products.

Zambias financial sector remains underdeveloped. According to an analysis by the Intrenational Monetary Fund, the central Bank of Zambia does not conduct regular stress testing of the financial institutions in the country.

Zambia has introduced a very limited form of form of carbon pricing in the form of vehicle taxes. Specifically, the government has introduced a once-off flat tax on vehicles more than five years old, called the Motor Vehicle Surtax. In addition, an annual charge on emissions, called the Carbon Emissions Surcharge, is applied to all vehicles. Finally, the government has also zero-rated excise duty for electric vehicles, but the measure has not had a discernable effect as there are no electric vehicles registered in the country.

Zambias 7th National Development Plan includes an integrated, multi sectoral development approach, featuring objectives for seven priority sectors, including agriculture, water, forestry, energy, wildlife, infrastructure and health. Similarly, the Environmental Management Act features the development of sector-specific environmental management strategies across various key sectors in Zambia. However, greater ambition and coordination is required to address the multiple challenges the country faces in relation to climate related impacts. Recent estimates point to a loss of between 0.4 and 0.9 percent of annual economic growth due to the effects of climate change, affecting key sectors such as agriculture, manufacturing, mining, energy, and services. In the energy sector, for instance, erratic rainfall patterns are already affecting the countrys hydro-power generation, the largest source of electricity in the country. Further detail is needed in terms of sustainable forest management, as significant deforestation and forest degradation has contributed to Zambia being identified as a significant GHG emitting country.

Despite being a relatively new concept in Zambia, social and environmental entrepreneurship has recently begun to emerge. However, governmental efforts in this area have been largely modest to date in terms of legislative and policy support. For instance, there is no distinct legal form or registration process for social enterprises in Zambia. The most recent 7th National Development Plan mentions promotion of the use of the cooperative enterprise model as a source of job creation, but no explicit mention to environmental or social goals is made in the document.

Zambias National Determined Contribution calls for reducing carbon dioxide-equivalent emissions by at least 25 percent by 2030 compared to the 2010 base year emission levels, a level that can to 47% if the country can secure significant international support to finance the proposed mitigation and adaptation plans. However, there is currently no initiatives underway to use carbon budgeting as a policy tool to limit the countrys sectoral carbon emissions trajectory. Neither the countrys National Policy on Climate Change nor its National Adaptation Plan of Action calls for strict limits on emissions in the countrys main economic sectors in line with achieving the Paris Climate Agreements.

In terms of electricity generation, Zambia relies heavily on hydro power, which accounted for 99% of electricity generation in 2011. However, due to important climate related shocks in recent years, the county has embarked on a strategy to diversify electricity generation in recent years. In 2019 hydro power accounted for 81 percent of electricity generation while the use of fossil fuels grew to over 16 percent and solar represented only 3 percent of electricity generation. This trend shows a very marginal advance in recent years of solar and wind power, coupled with a troubling increase in the use of fossil fuels for electricity generation. In terms of heating, fuelwood usage is dominant, especially in the rural areas and represents a major source of deforestation and GHG emissions. Despite this, the countrys climate policy framework fails to adequately address this and put in place an ambitious and credible plan to address this challenge.

The government of Zambia has experimented with some pilot initiatives to promote Green job creation. For instance, the government launched the Zambia Green Jobs Programme in 2013 with financial assistance form the government of Finland to support job creation in sustainable micro, small and medium enterprises in the building construction sector. Similarly, the Zambia Forestry and Forest Industries Corporation (ZAFFICO) currently employs a significant number of people in a tree planting initiative, financed by the Government. However, the programme was time limited and of limited scope in a country with important poverty and inequality challenges. The latest 7th National development Plan mentions the goal of creating jobs in the climate smart and organic agriculture, sustainable forestry, and sustainable construction sectors, but is limited in terms of operational detail.

Despite a period of recent economic growth that has brought poverty reduction progress, the country continues to have a high and persistent poverty level, particularly in rural areas and a high level of inequality. Due to this, the country is implementing an expansion of its social protection programmes, including a Social Cash Transfer initiative, and a Farmer Input Support Programme and Food Security Pack. The Social Cash Transfer Programme provides non-conditional transfers to extremely poor households, targeting households with persons with severe disabilities; the elderly, chronically ill persons, and female headed households with 3 or more children. The Farmer Input Support Programme is a Government agricultural subsidy that provides agricultural inputs to viable small-scale farmers and has contributed to the governments policy of agricultural diversification, and improved farmers resilience to climate change. Despite these advances, there remains very few linkages between poverty reduction programs and green or sustainability programmes or initiatives.

The government of Zambia recently approved the National Planning and Budgeting Policy with the goal of improving public sector responsiveness, transparency and accountability. The policy features a more inclusive planning and budgeting process with increased participation of stakeholders in the policy development process. To facilitate this, the policy established several consultative and advisory structures, including the National Development Coordinating Committee at the national level and the Provincial and District Development Coordinating Committees at the sub-national levels. These committees include representation from the private sector, trade unions, civil society and faith-based organisations, academia and the youth organization. While this represents progress in terms of participatory governance, its scope and effectiveness is limited and the process does not include a robust impact assessment process with an environmental and/or gender dimension.

While Zambia has implemented various interventions for addressing poverty alleviation among the countrys vulnerable population, limited examples exist of the use of poverty alleviation measures and programmes to also address the important environmental and climate change related challenges that Zambia faces. On such examples is the Farmer Input Support Programme that features an agricultural subsidy that provides agricultural inputs to viable small-scale farmers. The support is administered through an innovative electronic voucher system, intended to eliminate administrative costs and improve targeting. The support can be used to purchase locally produced organic fertilizer with the goal of stimulating the local production oforganic fertiliser products.

Zambia faces significant environmental challenges, particularly as a result of impacts caused by climate change. The increased demand for land for agriculture and the use of wood fuel as the main source of energy for the majority of the population has contributed to important degradation and significant deforestation. To respond to these challenges, Zambia has developed a robust policy framework to support environmental protection and mobilise resources for climate mitigation and adaptation initiatives. For instance, to combat deforestation and forest degradation, Zambia has developed a national strategy based on an integrated natural resources management perspective at landscape level. The strategy supports the planting of trees in new areas, reforestation and natural regeneration of degraded forests, but requires greater ambition in light of continued loss of forest coverage in the country in recent years. For instance, in 2019 a total of 1,195,355 hectares of land had forest management plans, nearly achieving the goal of 1,250,000 hectares set out in the 7th National Development Plan. Zambia has also developed a National Strategy to Reduce Deforestation and Forest Degradation. The countrys second National Agriculture Policy (2016) promotes climate-smart agricultural practices such as conservation agriculture and agroforestry and seeks to develop linkages to other sectors such as forestry, energy, land use and infrastructure development. In terms of water management and in response to the disruption of traditional rainfall patterns due to climate change, the government is promoting initiatives to incentivise water harvesting, water conservation, and small-scale irrigation.

Zambia currently lacks an official natural accounting methodology, system or metrics. However, it has taken initial steps to explore the development of natural capital accounting capacity. For example, Zambia is a participant in the Government Dialogue on Natural Capital, a platform for governments to explore and strengthen their role in scaling up and mainstreaming the capitals accounting approach. The initiative was set up in 2017 by the Netherlands and Scottish governments and the Natural Capital Coalition, in collaboration with non-governmental organizations such as the Green Economy Coalition and the WAVES Program.

Zambia has only recently begun to take its first, very preliminary steps to creating a natural accounting system via its participation in the Government Dialogue on Natural Capital, a platform for governments to explore and strengthen their role in scaling up and mainstreaming the capitals accounting approach, initiated in 2017 by the Netherlands and Scottish governments and the Natural Capital. No steps have been taken as of to move further along in this process, such as the creation of a national, independent body to oversee the implementation of a national natural accounting system.

In recent years Zambia has taken some initial steps to introduce fiscal reforms to protect the natural environment and avoid the damaging effects of climate change. Notably, in 2018, the government began implementing a feed-In-tariff programme in order to encourage private investment in small-scale renewable energy projects. Similarly, the government has begun implementing a weather index insurance scheme, which pays indemnifications to farmers in case of severe weather conditions that affect their crops. And while the government still subsidises fossil fuels, the latest 7th National Development Plan calls for a gradual adjustment of fossil fuel prices to reflect their negative climate related and pollution externalities. Also, the government has recently waived import duties and value added taxes for the purchase of green equipment and products and has introduced a once-off flat tax on vehicles more than five years old, called the Motor Vehicle Surtax, as well as an annual charge on emissions, called the Carbon Emissions Surcharge.