President Hakainde Hichilema has urged the World Bank Group to take necessary decisions and steps to help countries like Zambia avoid going into economic shutdown.
President Hichilema said there is need for the World Bank Group to make a decision on the Catastrophe Deferred Drawdown Option (Cat DDO) so as to help Zambia avoid an economic shutdown.
The Cat DDO is a contingent credit line that provides immediate liquidity to International Bank for Reconstruction and Development (IBRD) member countries in the aftermath of a natural disaster.
Mr Hichilema said climate change has brought a new dimension which the government did not fuse into its debt restructuring and sustainability programming , and has consequently affected the country’s 2024 growth projection of 4.7 percent.
President Hichilema was speaking when a World Bank team led by Regional Vice President for Southern and Eastern Africa Victoria Kwakwa, paid a courtesy call on him at State House.
President Hichilema explained that with climate change affecting energy and agriculture, there is need to make energy available for irrigation and food security.
“Our growth projection was that , this year we would go to 4.7 percent but with climate change, we are talking about two percent plus. The drought has injected two national risks , energy and food,” he said.
President Hichilema said the World Bank has a daunting task to help repair the damage that has been caused by climate change through the Cat DDO.
“There is a need to front load that project so that we can make energy available for irrigation agriculture, to avoid an economic shutdown by climate change whose damage may escalate to even the two percent growth made,” he said.
Mr Hichilema said the government’s key area in managing the drought effects and risks is energy, food, water and sanitation as well as education.
At the same meeting, Secretary to the Treasury Felix Nkulukusa said the government is working with the World Bank on the National Energy Advancement and Transformational project (NEAT).
Mr Nkulukusa said the $700 million project will run from 2023 to 2033 and is aimed at making ZESCO sustainable and attract new private sector investment.
“In phase one , we did have an allocation of $100 million and a disbursement of $25 million was done last week,” he added.
The Secretary to the Treasury, said the Cat DDO will greatly help Zambia to respond to the energy crisis
And World Bank delegation leader Ms Kwakwa disclosed that the World Bank is bringing a new instrument to Zambia called the Cat DDO and the project will be tabled by the World Bank board before the end of the year.
She explained that the Cat DDO is a form of contingent financing offered to help countries take a proactive stand towards reducing exposure to catastrophic risk and access to funds immediately after a natural disaster.
Ms Kwakwae stressed that the drought reinforces the importance of continuing to build resilience in energy, water resources management including irrigation and adapting more climate smart agriculture.
She noted that there is a need to diversify the energy sector and sources through regional trade.
Ms Kwakwa also said the World Bank will work with Zambia to remove major hindrances to private investment and growth.
“We will continue to work with you to push this agenda and also put in place things that will stimulate growth in a way that you are able to achieve your objectives of reducing poverty and uplifting all Zambians,” said Ms Kwakwa.
The World Bank regional chief said that her organization will work more closely with Zambia on mechanisms that will allow the country to manage the revenues that come out of investments, particularly revenues from the mining sector.