In Part One of the opinion, I explored how Zambia’s MSMEs despite being the backbone of the economy remain largely excluded from mainstream finance, caught in the “missing middle” between microloans and corporate credit. I also highlighted how climate finance is emerging as a fresh opportunity, offering MSMEs a pathway to access funding without being weighed down by rigid collateral requirements. In this second part of the opinion, I build on that conversation by answering the critical “how” question: how can MSMEs practically position themselves to attract climate finance while advancing Zambia’s low-carbon transition?

Since the enactment of the Green Economy and Climate Change Act of 2024, Zambia has begun to attract targeted climate finance for MSMEs, though at a scale far below the estimated US$50 billion climate investment needs by 2030. The most significant facility so far is a US$50 million loan from British International Investment (BII) to ZANACO, earmarked for MSMEs and climate-related projects. Other initiatives include the Agribusiness SME Accelerator, which has mobilized up to US$500,000 in new investments, the Prospero-ZICB Climate Finance Facility, which has channeled between US$50,000 and US$90,000 to local enterprises, and the UN Joint SDG Fund, which has committed over US$700,000 to renewable energy adoption among MSMEs in Eastern Province. However, unless MSMEs deliberately position themselves to attract this funding, they risk being bystanders while corporates capture the bulk of it.

Green Operations as the Gateway to Climate Finance

One of the most practical points of entry for MSMEs into climate finance is through the adoption of green operations. Switching to renewable energy, such as installing solar panels for shops, or agro-processing plants, not only reduces the burden of electricity costs but also signals environmental responsibility to financiers. Similarly, investing in energy efficiency, whether through efficient lighting or modern machinery, demonstrates forward-thinking management. These visible, measurable steps make it easier for MSMEs to qualify for renewable energy financing programs and climate-related credit lines.

ESGs Reporting as a fundamental Magnet

Accessing climate finance will further require MSMEs to demonstrate credibility through reporting. This does not mean producing complex reports, but rather developing simple, annual summaries that capture energy use, waste management, employee welfare, and governance practices. A two-page sustainability report will go a long way in signaling readiness to financiers. Over time, building on this culture of reporting will strengthen trust and ensure the MSMEs steadily move from small grants and pilot funds to more long-term financing facilities.

Aligning with National and Global Climate Goals

Perhaps the most strategic way for MSMEs to position themselves will be in aligning their work with Zambia’s national and global climate goals such as Sustainable Development Goals (SDGs) number 7,12, and 13; Affordable and Clean Energy; Responsible Consumption and Production, and Climate Change respectively. MSMEs that frame their operations whether in renewable energy, agriculture, or green services as contributing directly to these targets will stand to gain visibility with the financial institutes searching for credible local partners to implement global commitments. In essence, alignment with national priorities will not only enhances eligibility for climate finance but also place the very MSMEs at the center of Zambia’s low-carbon transition. Here, MSMEs and government agencies can work together to map which MSME sectors contribute most to Zambia’s NDCs and then linking these businesses with suitable funds.

Climate Smart Agriculture

For the many Zambians MSMEs engaged in agriculture, climate finance offers opportunities to scale through climate-smart practices. Simple but high-impact changes like crop rotation, conservation farming, or water-efficient irrigation systems increase yields while reducing vulnerability to climate shocks. These practices also align closely with the objectives of climate funds that prioritize adaptation in agriculture. By adopting such approaches, agro-based MSMEs can position themselves as prime candidates for support from facilities like the UN SDG Fund or agribusiness accelerators, both of which are actively funding sustainable farming initiatives in Zambia.

By embedding these practices into the daily operations of their businesses, MSMEs will not only gain visibility from local and international funders searching for credible partners but also contribute to Zambia’s commitment to reducing greenhouse gas emissions as outlined in Zambia’s NDCs commitments.

About the Author:

Barnabas Katawa Mwale serves as the Lead Trade and Investment Researcher at the Centre for Trade Policy and Development. He holds a BSc in Economics and Finance from the University of Lusaka and is currently pursuing an MSc in International Trade and Policy at ZCAS University. He holds other qualifications from The Trade Policy Training Centre in Africa (TRAPCA) and The International Trade Centre (ITC) in International Trade, Trade Law and Business Advocacy.