BoZ BANKS ON PARTNERS TO FINANCE ZAMBIA-DRC BATTERY DEAL
THE Zambia- Democratic Republic of Congo (DRC) battery initiative will require various models of financing from both banks and non-bank players as well as coordination from the capital market, and insurance services, among others.
This is because the financial sector will have to play a critical role to support successful execution of this project, according to the Bank of Zambia (BoZ) Governor, Denny Kalyalya.
According to Dr Kalyalya, the mobilisation of significant financial resources from both external and internal sources at an affordable cost would be required.
Dr Kalyalya stated that there would be need to cater for different financing needs of the various businesses that would participate in the project.
“These needs go beyond bank financing for mature or already established companies. Other types of funding and financial services will be required, such as, venture capital funding as well as the provision of insurance services,” he said at the launch of the project in Lusaka recently.
Dr Kalyalya cited that strengthening the coordination between the regulators of the banking and non-banking sectors, the capital market, and insurance services would therefore also be critical in ensuring that the whole range of the required financial services are provided.
In Zambia, he pointed out, this meant stepped up coordination among financial sector regulators, the Securities and Exchange Commission, the Pensions and Insurance Authority, and the Central Bank. “There will be need to strengthen the role of Development Finance Institutions, both international and domestic, and to explore the use of innovative products,” Dr Kalyalya said.
He explained that the advantages of this undertaking to Zambia and the DRC included catalysing green-financing and contributing to the current global transition to the green-economy.
The Governor said the project would also enhance export diversification and improving the terms of trade through exports of high-value manufactured products.
“Other advantages included higher foreign exchange inflows that will contribute to the stability of the foreign exchange markets and in the process favourable inflation outcomes.
“Creation of backward and forward linkages that can catalyse the development of other economic activities, such as, transportation and services, leading to an increase in the gross domestic product,” Dr Kalyalya said.