FINANCING OF NATIONALLY DETERMINED CONTRIBUTIONS (NDCs) TO CLIMATE CHANGE – HOW CAN ZAMBIA IMPROVE?By Natasha Mhango

Participants from various institutions gathered  for a CTA-sponsored
workshop in Chisamba to share ideas on climate change finance

Nationally Determined Contributions (NDCs) are the core of the Paris Agreement at the 21^st Conference of Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC). They include country-specific strategies and targets for reducing global Green House Gas (GHG) emissions in a bid to address climate change. Zambia’s Intended Nationally Determined Contributions (INDCs) were submitted in 2015, and when Zambia ratified her  INDCs in December 2016, they became her NDCs. Zambia’s NDCs comprise both mitigation and adaptation measures. Here adaptation measures have strong mitigation components.

As a mitigation measure, Zambia committed herself to reduce her GHG emissions by about 47% from the 2010 baseline.

This requires US$50 billion over a period of 15 years (from 2015 to 2030). However, climate change investment flows currently stand at US$0.54 billion per year, implying about deficit of about US$2.3 billion annually.

A workshop was held on 2^nd and 3^rd May 2019 held in Chisamba, near Lusaka to validate the findings of a study commissioned by the ACP-EUTechnical Centre for Agriculture and Rural Cooperation (CTA) based in the Netherlands entitled Promoting Climate Finance to Support Agriculture through Nationally Determined Contributions (NDCs) Processes in ACP Countries: Case of Zambia. During the workshop it was reported that Zambia has made significant progress in her readiness to implement her NDCs. However, significant funding gaps exist and therefore there is an urgent need for more funding for effective implementation.

In a presentation of a country-report on the status of Zambia’s NDCs, the consultant that was commissioned by CTA to undertake the study, Dr. Gudeta Sileshi said that Zambia’s NDCs were fully aligned to the SDGs especially SDG1 (No poverty), SDG2 (Zero hunger) and SDG13 (Climate Change). However the country’s ambitious goal to reduce her GHG emissions require a significant amount of resources from both domestic (US$15 billion) and international assistance (US$35 billion) until 2030.

“The current volume of financing is not adequate to cover the US$50 billion [that] Zambia proposed for 15 years from 2015 to 2030. The shortfall of a little over US$2.5 billion annually, and that kind of funding requires aggressive resource mobilization from external sources such as the dedicated international climate funding institutions and internal source including the government, cooperating partners, private sector and CSOs” Dr. Sileshi said.

His presentation further revealed that Zambia had placed significant emphasis on adaptation targets which cover agriculture, infrastructure and water sectors among others. In the agricultural sector, in particular, the government is aggressively promoting climate smart agriculture (CSA) such as conservation agriculture and crop diversification among other things. In that regard, Zambia is also on track in placing agriculture on the climate agenda in line with the Koronivia Joint Work on Agriculture

With regard to investments in the agricultural sector, the government is guided by the National Agricultural Investment Plan(NAIP) a 5-year plan through which a budget target of  US$2.73 billion annually was proposed and would be financed by government and its cooperating partners, beneficiary farmer contributions and the private sector.

But various challenges exist particularly in the flow of private sector finance.

“Agriculture in general is a long-term investment ranging from 5 to 10 years , so it takes a long time for banks and financial institutions to be convinced that farmers investing in CSA can pay back,” Dr Sileshi said.

He further explained that there is an information gap and lack of reliable data on the returns of investments that can be realized from CSA and hence another reason why financial institutions are reluctant to offer credit to farmers.

In addition, it was observed that farmers lacked sufficient information on agricultural insurance products and hence were reluctant to purchase them thereby making themselves vulnerable to climate change disasters.

Way Forward

Prof Olusegun Yerokun - an independent consultant who was a participant in the workshop -explained that some of the recommendations to the highlighted challenges of private sector finance included the fact that existing climate change concepts should be developed into bankable project proposals as one way of attracting funding to climate change.

“There is a framework in terms of structures like a council of ministers right down to the technical committees and some sub-committees; [and] some of the things they are trying to do is to create a funding mechanism…they have been talking to some people who will be able to assist in …also building local capacity how to develop those bankable documents to ensure sustainable resource mobilization,” Prof  Yerokun added.

He noted that these bankable projects comprised landscape agro-ecological approaches such as multi-purpose dams and aquaculture which could be demonstrated in a business sense so as to attract private sector investment.

Recently, Zambia developed the Climate Smart Agriculture Investment Plan (CSAIP) in a bid to enhance the funding for CSA. The most promising projects that have been identified in the Plan include crop diversification into legumes, commercial horticulture, agroforestry and reducing post-harvest losses.

These projects would attract investments in infrastructure such as irrigation, water shortage, facilities and fish hatcheries. The CSAIP is evidence that Zambia’s NDCs are well anchored on climate change-related sectorial polices, strategies and projects; and that the country is ready in terms of the core components of climate change finance.