Zambia

Zambia has already been experiencing the negative impacts of climate change, including extreme weather conditions such as severe and prolonged droughts, rising temperatures and variations in rainfall patterns. In recent years, the country has developed a policy framework to address these challenges, implementing structural changes to the economy and its future growth path to reduce greenhouse gas emissions and build resilience into economic, natural and social systems. Zambias Nationally Determined Contribution commits to reducing carbon dioxide-equivalent emissions by 25% by 2030 compared to 2010 base year emission levels. Conditional on international financial assistance, this emissions reduction target may increase to 47%.

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 is the development of a more inclusive planning and budgeting process which increases the participation of stakeholders at all levels of governance through establishing new consultative and advisory structures. Consultation is facilitated at the national level by the National Development Coordinating Committee, and at sub-national level by Provincial and District Development Coordinating Committees. 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 organizations.

However, in practice, consultations regarding policy development are infrequent, hindered by limited technical and financial resources, and lack any consideration of inclusion (a clear challenge for Zambia as it is categorised as a most gender unequal country in a 2019 UN Human Development Report). No evidence was found of any guidance or support for employee involvement in corporate governance.

Zambias National Vision 2030 outlines the countrys development roadmap which 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. In recent years the Zambian government has been active in integrating the SDGs into national economic policy planning process and more generally promoting discussion of the SDG agenda with businesses. For instance, the Parliamentary Caucus Committee on the SDGs has been instrumental in fostering and sustaining SDG engagement, alongside National Development Coordinating Committees which operate as an information sharing platform between the private sector and government officials. However, these committees are primarily oriented towards government information sharing, and lack capacity to operate in a way which meaningfully seeks engagement from the private sector in an enabling and proactive way. To meet this gap, UNDP recently began their own engagement processes in the country to foster greater private sector involvement with SDG implementation.

While Zambia lacks an official wealth accounting system or metrics, the government has shown an interest in developing its natural capital accounting capacity. 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, and with support from the World Bank Wealth Accounting and Valuation of Ecosystem Services (WAVES) Program has developed water, forest and land sub-accounts. However, without continued international support, the extent to which the government intends to take ownership of these accounts and continue to develop them is unclear.

While there are no reform proposals under development, Zambia is in the process of developing a green growth strategy and has engaged in some initial discussions on green finance.

The wider context is a country facing significant fiscal constraints, with the government prioritising the modernisation and stabilisation of the banking sector at present in order to secure increased access to financial services. In Zambias 7th National Development Plan the government seeks primarily to harmonise and simplify legislation governing the financial sector to support economic growth.

Zambia is dealing with large fiscal imbalances resulting from years of economic mismanagement, including an overly ambitious public investment drive that did not significantly boost government revenues. The situation was further exacerbated by a drought in 2019 and the COVID-19 pandemic leading to debt distress, and in November 2020 the country defaulted on its Eurobonds. As part of an arrangement for USD$1.4 billion under the IMFs Extended Credit Facility, Zambia has committed to a program of economic reform which aims to re-establish sustainability through fiscal adjustment and debt restructuring, create fiscal space for social spending to cushion the burden of adjustment, strengthen governance and reduce corruption vulnerabilities. Fiscal consolidation plans under the program include reforming some harmful subsidies, such as the fuel subsidies applied during the pandemic to ease the impact of rising oil prices. In December 2021, the government restored cost-plus pricing for petroleum products. The government has also launched some green tax incentives and subsidies, including a feed-in-tariff program supporting small-scale renewable energy producers, and a number of tax and import exemptions on green products.

Zambias financial sector remains underdeveloped. According to analysis by the International Monetary Fund, the central Bank of Zambia does not conduct any stress testing of banks or financial institutions. As part of Zambias 2020-2023 Strategic Plan, the bank is working to strengthen micro-prudential regulation and supervision and is currently in the process of developing a stress testing framework.

Zambia has introduced vehicle taxes as a very limited form of carbon pricing. Specifically, the government has a once-off flat tax on vehicles of more than five years old (Motor Vehicle Surtax) and applies an annual charge on emissions (Carbon Emissions Surcharge) to all vehicles based on their engine displacement. The government has also zero-rated excise duty for electric vehicles and halved their customs duty. However, there are no indications of discussions or intent to expand the tax to other sectors beyond transport. Zambia also participates in international voluntary carbon markets and has passed a law on forest carbon to ensure trading is regulated domestically to protect the interest of communities.

While there is no clear overarching sustainability policy spanning key economic sectors, several of Zambias sectoral plans (covering agriculture, forestry, wetlands and environmental management) along with its 7th and 8th National Development Plan contain sectoral sustainability policies. For example, 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. However, coordination and monitoring is non-existant.

No support is currently in place for green SMEs or social enterprises. While the Zambian government recently established a Ministry of Small and Medium Enterprise Development, its focus is broad and it does not currently provide support specifically for green SMEs. In terms of government policy, Zambias 7th National Development Plan mentions the promotion of the use of cooperative enterprise models as a source of job creation, but there is no further discussion on green or social business models or modes of support. No evidence that any legal form or registration process for social enterprises is under development.

Zambias Nationally Determined Contribution calls for reducing carbon dioxide-equivalent emissions by at least 25% by 2030 compared to 2010 base year levels, increasing to 47% with support from international finance. Carbon budgeting is not currently used as a policy tool to limit the countrys carbon emissions. Neither the 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 Paris Agreement commitments. However, there is some evidence that discussions are beginning to take place on differentiated emissions per sector and establishing an emissions inventory.

In terms of electricity Zambia is starting from a high baseline, with hydropower providing almost 99% of the countrys electricity generation in 2011. A severe drought and the subsquent reduction in electricity generation during 2015 sparked discussion around diversifying into other sources. In 2018, the government began implementing a feed-in-tariff programme to encourage private investment in small-scale renewable energy projects. However, as of 2019, hydropower accounted for 81% of electricity generation and solar 3%, while fossil fuels grew to over 16% - indicating that diversification has so far largely been met by fossil fuels. Zambias NDC targets are to triple power generation and continue to diversify its energy mix, but it lacks a precise renewable energy target and credible implementation plan leaving considerable uncertainty over the countrys trajectory and future energy mix.

Green jobs are acknowledged in Zambias development plan and the government has partnered with international funders to experiment with a few, isolated pilot initiatives to promote green job creation. In 2013, with financial assistance from Finland, the government launched the Zambia Green Jobs Programme, which aimed to increase employment within sustainable SMEs in the construction sector. However, the government did not take ownership of initiatives, with actions coming to an end with the close of the programme. The Zambia Forestry and Forest Industries Corporation developed an employment initiative in agroforestry and tree planting, but the scheme was of limited scope and duration. While the 7th National Development Plan mentions the goal of creating jobs in climate-resilient and organic agriculture, sustainable forestry, and sustainable construction it provides very little indication of any proposed actions.

While Zambia has a number of social policies in place to support the poorest, these are not integrated with environmental issues and therefore do not support the poorest with the green transition. Nevertheless, Zambia is currently expanding its social protection programmes, including its Social Cash Transfer initiative, 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, and female headed households with three or more children. The Farmer Input Support Programme provides agricultural inputs to viable small-scale farmers to enhance agricultural diversification and economic resilience.

Public participation in policymaking is very limited and largely implemented as a government box-ticking exercise, lacking genuine engagement. Zambias recently approved National Planning and Budgeting Policy sets out a somewhat more inclusive planning and budgeting process with increased participation of stakeholders but does not go so far as to make participation mandatory. As opposed to direct public engagement, policy consultation is carried out through the mechanism of National, Provincial and District Development Coordinating Committees, which comprise groups of representatives from the private sector, trade unions, civil society and faith-based organisations, academia and youth. While this represents progress against a low baseline, the effectiveness of such exercises is considered extremely limited. Participation also relates solely to policy development, with no evidence of any impact assessment procedures.

While Zambia has implemented various interventions for addressing poverty alleviation among the countrys vulnerable population, the programmes do not pilot innovative green or social protection approaches aimed at broadening citizen participation in a green economy. For example, the Farmer Input Support Programme provides general agricultural subsidies to support small-scale farmers in purchasing domestic crops and organic fertiliser products with limited environmental and social benefits.

No clear, overarching strategy on the management of land and the blue economy, though Zambia has mainstreamed 86% of the SDGs in its 7th and 8th National Development Plans. However, targets remain unclear and spread across a range of policies and strategies with conflicting priorities (including Zambias National Conservation Strategy, National Biodiversity Strategy, National Agricultural Policy, Forest Policy, National Policy on Environment, and Reduction of Emissions from Deforestation and Forest Degradation REDD+ Strategy etc.).

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, and has taken some initial steps towards exploring the development of its natural capital accounting capacity. With support from the World Bank Wealth Accounting and Valuation of Ecosystem Services (WAVES) Program the government has conducted some scoping research and developed initial water, forest and land sub-accounts. However, without continued financial assistance, the extent to which the government will take ownership of these accounts and continue to develop them is unclear.

There currently no plans to create an independent body to oversee the implementation of a national natural capital accounts. However, Zambia does have a cross-sectoral technical committee on climate change which provides expert advice on biodiversity and natural resources to the climate and environment department.

Zambia has taken some initial steps towards realising green fiscal reforms, with some guidelines released and limited taxation reforms in progress. Under the Biodiversity Finance Initiative (BIOFIN), in partnership with the Ministry of Lands and Natural Resources, Zambia has developed guidelines and listing rules for green bonds to attract investments in projects that will help protect and restore biodiversity. BIOFIN is also supporting Zambia to mainstream biodiversity into its (soon to be developed) Green Finance Policy for the financial sector, as well as the countrys credit policies and other financial sector products. As part of the fiscal consolidation programme supported by the IMF, Zambia is in the process of reforming some environmentally-harmful subsidies, including fuel subsidies applied during the pandemic to ease the impact of rising oil prices. In December 2021, the government restored cost-plus pricing for petroleum products.