Zambia bets on blended financing to power rural communities

From the newsletter

ZESCO, Zambia’s national power utility, has formed a $300 million joint venture with Anzana Electric Group, a developer, investor and operator of clean energy projects, to accelerate electrification along the Lobito economic corridor. The investment will be backed by blended financing that will help to reduce risks associated with rural electrification.

• Blended financing, a mix of commercial and concessional funding, is becoming increasingly crucial to Africa’s electrification efforts, as it helps attract private capital and makes large-scale energy projects in rural areas financially viable.

• Several African power utilities have adopted this approach to expand rural electrification. Kenya, for example, stands out as a leading case, having connected at least 900,000 people through its rural electrification program.

More details

• The partnership aims to connect nearly 2 million households and businesses to the grid by 2030. The initiative will rehabilitate and expand the national electricity network, reduce risks tied to rural electrification, and support new generation, including run-of-river hydropower.

• The joint venture’s first milestone will be a pilot project in North-Western Province, scheduled to begin in 2026. Over two years, it is expected to deliver about 40,000 new connections and 8 MW of new generation capacity, setting the stage for broader expansion along the Lobito economic corridor. This corridor, which links Angola, Zambia, and the Democratic Republic of Congo, is rich in critical minerals and is fast becoming a major economic artery for Southern and Central Africa, enabling both trade integration and energy access.

• But a lack of funding continues to hold back this potential. By utilising blended finance, Zambia expects to mobilise private sector investment and support the government’s goal of raising electricity access from 54% today to 100% by 2030, in line with its national energy policy. For Anzana, a U.S.-based company, this represents an opportunity to expand its footprint in Africa. In June this year, the company committed to invest in the $760 million Ruzizi hydropower plant in the DRC, following a US-brokered peace deal.

• For Zambia, it is pursuing a path that combines grid expansion with off-grid solutions. Recent reforms, such as the launch of an open electricity access market, are allowing independent power producers (IPPs) and large consumers to connect directly to the grid and trade electricity. This is expected to create a more competitive and transparent market within the country. The new net metering regulations also came into effect in early February, further supporting this market evolution.

• The country is targeting the installation of about 1,000 MW of solar capacity by the end of 2025. While this goal is still some distance away, progress is underway, with at least 29 Independent Power Producers (IPPs) signing power purchase agreements with the national utility, ZESCO. Earlier this month, the country commissioned a 100 MW solar plant as part of this broader ambition. The private sector is also moving quickly, partnering with industrial clients to generate their own electricity.

• Beyond its domestic market, Zambia is pursuing opportunities in the regional power market. Among these is the construction of a power interconnector with Tanzania, a $292 million project funded by the World Bank. Construction for this project is underway.

• For ZESCO Managing Director Justin Loongo, the new collaboration with Anzana goes beyond infrastructure. “This is about regional integration, jobs, and powering a better future for Zambians along the Lobito economic corridor,” he said. Anzana CEO Brian Kelly added that the deal builds on the company’s experience with Weza Power in Burundi, showcasing how strategic partnerships can accelerate Africa’s next wave of electrification and economic growth.

Our take

• Beyond concessional funding, local financial institutions and pension funds should be engaged to finance projects. This will close the financing gap and accelerate the adoption of solar systems and appliances.

• As electrification expands, Zambia must invest in skilled technicians, engineers, and entrepreneurs to build, maintain, and operate energy systems. Electrification should be framed not just as access to power, but as a job creation and economic growth strategy.

• With the Lobito Corridor linking Angola, Zambia, and the DRC, Zambia is well-positioned to become a regional power hub. Strengthening interconnectors and cross-border PPAs will be essential to balance supply shocks, share renewable resources, and stabilise electricity prices.