The Zimbabwe Stock Exchange has put in place a three-pronged strategy in partnership with the Ministry of Energy and Power Development that seeks to make investments into the energy sector an attractive investment class while at the same time contributing to the national crisis.
Zimbabwe is currently undergoing an energy crisis after electricity generation plunged to below 1 000MW.
ZSE chief executive Justin Bgoni told an Association of Investment Managers of Zimbabwe (AIMZ) annual conference recently that the exchange is looking into the energy sector as investments into it matches with long term money.
This comes as global energy investment totalled more than $1.8 trillion in 2018, a level similar to 2017. According to the World Energy Investment 2019 report, for the third year in a row, the power sector attracted more investment than the traditional oil and gas industry.
Bgoni told the asset managers, who among other roles, are in the business of growing investors funds, that the energy sector was a big player in terms of investment and good returns.
“For a stock exchange we think that the energy sector is a big player in terms of investment. As such we have partnered the Ministry of Energy to see how we can provide a platform for investments particularly for independent power producers (IPPs). We looked at ZESA and thought it would be difficult to try and bring them to the market. But we believe that IPPs are more flexible in terms of fund raising.”
To begin the process, the ZSE will host an IPP Masterclass next week, which seeks to promote fundraising through listing on the ZSE either through equity or on the debt market.
Already, a new start up, Invest Solar is pursuing a listing to fund raise for its solar projects across the country inclusive of Harava Solar Park in Seke, which is set for commissioning at the end of the year. It is also pursuing a listing in Botswana for its regional activities.
Invest Solar has already raised capital for the first phase of its project from financing entities like Norfund and Ecsponent Limited.
Invest Solar’s strategy is to focus on niche project sizes in carefully selected markets. Such projects include small grid tied projects (5MW-40MW) with attractive tariffs, off Grid solar solutions serving schools, healthcare centers, mines/corporates.
Bgoni said after the Masterclass, the exchange together with the Ministry will set up working groups which will come up with a desired framework, which is both encouraging to energy companies and investors alike.
The ZSE is also working with the Securities and Exchanges Commission to draw up a Green Bond framework.
Green Bonds enable capital-raising and investment for new and existing projects with environmental and climate benefits. The bonds are intended to encourage sustainability and to support climate-related or other types of special environmental projects. Elsewhere in the world, they are used to finance projects aimed at energy efficienncy, pollution prevention, sustainable agriculture, fishery, forestry and the protection of aquatic ecosystems.
But for a country that is not yet big on sustainable issues; Bgoni said a framework should be put in place. “Green bonds target a specific type of investor so we are working with SECZim to establish a framework on how they can be successfully launched.”