Budget 2023: A Boost for Environmental Development
Environmental sustainability is one of the four pillars of the UPND’s economic transformation plan outlined in February 2022. The plan, which focuses on the period 2023-25, provides a platform from which the government aims to lay the foundation and grow towards medium-income status by 2030.
The recent budget includes a number of measures to support this goal. Tackling high levels of deforestation is a core government priority. To overcome unnecessary deforestation, the government will establish timber exchanges around the country in 2023 to improve transparency in the timber trade. The first exchange is set to be the Nangweshi in Sioma District, Western Province.
Environmental sustainability is vital to the long-term health of the Zambian economy. Rich in natural resources, it is crucial Zambia fosters sustainable investment initiatives to ensure the prosperity of future generations whilst attaining the full potential of Zambia’s resources. This is why the government have announced plans to diversify power generation to include more renewable forms of energy such as hydropower.
For example, the commission of the Kafu Gorge Lower 750MW hydropower station is expected both to foster economic growth and to provide sustainable, reliable, energy for Zambians. Remarkably, hydropower now accounts for 82% of Zambia’s electricity generation capacity. Building on this will not only foster more power, by meeting the government’s goal of universal power, but also provide employment opportunities across the sector. At present, Zambia generates 1,000 MW more energy that its peak demand. The excess generation helps Zambia export energy to Namibia and Zimbabwe under recently confirmed power supply agreements.
Furthermore, the government has signed a £1 billion green growth compact with the UK Government to further facilitate investment in the renewable energy sector. The UK Minister for Africa, Vicky Ford, emphasised that the investment would be important for “thousands of jobs and supporting green energy production.”
Nicholas Woolley, British High Commission to Zambia, commented; “This is an extremely exciting time for the partnership between the UK and Zambia. This Green Growth Compact enables us to formally build a stronger trade and investment relationship, based on sustainability, mutual prosperity and creating opportunities for businesses and communities in both our countries.”
In addition to this major investment from the UK Government, the New Dawn administration was pleased to announce that taxes on green bonds are to be removed. The current tax regime on bonds outlines that interest income earned by an investor on bonds attracts a 15% withholding tax. This move by the Minister of Finance and National Planning to exempt the 15% withholding tax on interest income earned on green bonds ensures that investors will not pay this withholding tax on their interest income. This draw to greener investments will act as an incentive for investors to act in line with Environment, Social, Governance (ESG) goals, will strengthen the environmental pillar of the UNPD’s economic transformation plan, and ultimately will aid Zambia in its commitment to meeting the UN’s Sustainable Development Goals.
Image: Diego Delso via Wiki Commons