Stanbic calls for tariffs that promote long-term investment

Stanbic Bank sees the energy sector as a key driver in sustaining economic development, according to its investment manager.

The bank invested more than US$575 million in the development of Zambia’s energy sector in the last 2 years with the aim of tackling the energy crisis the country is experiencing.

“We need to look at whether the electricity tariffs that we have in this country are market-related, and if not, how to adjust them to make long-term projects bankable and profitable,” said Mwila Mwenya, manager of investment banking at Stanbic Bank Zambia. “We also need to provide a social safety net for people who may not be able to afford those tariffs.”

He was speaking on the side-lines of the Sustainable Energy Southern Africa Forum of the Africa-European Union Energy Partnership held in Lusaka this week.

The event provided an opportunity to discuss progress on Zambia’s Sustainable Energy for All (SEforAll) Action agenda and investment prospectus, to identify specific opportunities for strengthening multi-stakeholder partnerships to achieve the three goals of SEforAll, and to learn more about concrete markets and business opportunities for renewables in the Southern African region.

“Unlike many other sectors, electricity tariffs can’t just increase overnight, because the impact is much wider, so discussions have been taking place between the public and private sectors,” said Stanbic’s Mwila Mwenya. “The discussions have been fruitful, and we will probably end up at a point where the changes will happen and will happen in a way that people will pay the price of power that they should be paying. Commercial companies will pay what they should pay and the same goes for retailers.” he said.

Mwenya said that banks have a role as intermediaries, as they are able to put funds together to lend to organisations that need them, as well as their ability to educate promoters of big energy projects in sectors such as mining on how to access funding.

“Just as banks are always looked at as lenders, they should also see themselves as providers of advice. You educate an investor or a promoter on how to raise capital, on how to put in the equity that is required – how to maintain an equity level that is sustainable, because control isn’t everything,” he said.

“From Stanbic Bank’s perspective, we have an investment banking unit and part of what we do is provide advisory services. To work with the promoter of the project; you must start from the equity conversation, help them to put in enough equity, help them bring in equity partners and then help them make the project bankable for it to be able to get debt and funding. That is thinking from our local perspective on what Stanbic Zambia does for the world,” he added.

Last year Stanbic Bank scooped the Euromoney Excellence Award for being the Best Bank in Zambia through its leading role in providing structured finance for the mining, agriculture, manufacturing and SME sectors. The bank was also acknowledged for funding in excess of US$3 billion worth of projects across the Zambian mining spectrum, investing over US$575 million in the energy sector alone, and over US$155 million in the construction of shopping malls – all over the last 2 years.