Nairobi launch marks start of three year program to build green bond capability in Kenya and East Africa
What’s it all about
The Kenya Bankers Association (KBA), Nairobi Securities Exchange (NSE), Climate Bonds Initiative (CBI) and Financial Sector Deepening Africa (FSD Africa) in conjunction with the Dutch Development Bank FMO and the International Finance Corporation (IFC) have today launched Kenya’s Green Bond programme.
During the launch, KBA, the NSE, FSD Africa and CBI signed a Cooperation Agreement to support the development of a green bonds market in Kenya.
Funding from FSD Africa & FMO
FSD Africa has committed USD 600,000 over a period of three years, to fund the programme with the objective of aiding KBA to be in a position to tap the growing investor demand for green investments.
Through the partnership and funding from FSD Africa, a technical support programme will be implemented that will enable the Association to carry out research to explore the potential and capacity for green bond issuance in Kenya.
In addition, it will enable the development of a community of Kenyan-based licensed verifiers and support KBA’s efforts in building capacity locally to catalyze similar programmes across East Africa.
In addition to the FSD Africa funding, FMO had earlier committed USD 350,000 to support KBA develop the framework to create the industry’s first pooled green bond facility. The facility that would allow KBA member banks, especially Tier 2 and Tier 3 banks, and corporates to take advantage of wholesale debt capital markets.
The launch of the Kenya Green Bond Programme comes at a time when African countries are gaining momentum to align with the burgeoning activity within the green finance space.
Kenya, Nigeria, Morocco, Egypt and South Africa are among countries that have made strides to establish standards, harmonize public and private sector efforts as well as build capacity within the green economy.
Who’s saying what:
Habil Olaka, CEO of Kenya Bankers Association:
“We are very pleased and excited to announce this partnership. This alliance has given us the opportunity to work closely together as a sector in developing Kenya’s green finance market through the green bond programme.
“One of KBA’s main objectives is to develop and sustain best practices that will inevitably strengthen financial structures in Kenya. FSD Africa, FMO, IFC, CBI and the NSE have all focused over the years on growing sustainable finance practices in the financial sector and this strongly complements our objective.”
Geoffrey Odundo, Chief Executive of Nigeria Stock Exchange:
“The Exchange is committed to developing a vibrant green market for this region; we aim to create an environment that will allow the market to prosper in a secure and transparent way. Through the NSE, issuers and investors will have a platform where they can come together and fulfil their green objectives. The Kenya Green Bond Program is an innovative tool that will promote economic and climate resiliency for our country.”
Mark Napier, Director of FSD Africa:
“It is expected that this programme will improve access to a complementary source of longer-term capital alongside traditional, shorter term bank loans, while contributing to the financing of ‘green’ investments and improving the environment. “
“It will further support the national agenda that seeks to reinforce Kenya’s role as a regional leader in financial services as articulated by Vision 2030 and Kenya’s Green Economy Strategy and Implementation Plan (GESIP).”
Jurgen Rigterink, Chief Executive Officer of FMO:
“FMO is committed to develop and strengthen the green bonds market in Kenya with a vision to positively impact economic growth in the country. We are very enthusiastic to be part of the sustainable revolution in Kenya and being able to contribute in substantive sustainable ways towards improving environmental and social responsibility, and sustainable business practices. In addition, FMO is glad to see how the Green Bond Program builds on the Sustainable Finance Initiative, the banking sector initiative which FMO was also proud to be part of.”
Sean Kidney, CEO of Climate Bonds Initiative:
"We are very excited to be able to work with our partners to grow a green bonds market in Kenya. This is going to be part of delivering lower cost capital to green projects, and developing capital markets in Kenya.
“In this 'year of sovereign green bonds' Kenya is taking action and issuing will enhance its leadership positioning in Africa and provide a positive example to other nations looking for climate finance options."
The Last Word
Fostering green finance capabilities in emerging economies is integral to the success of country climate action plans. Doing so is an important part of working towards the emissions goals agreed in NDC commitments at COP21.
The Kenya Green Bond Program has just taken a big step along that COP21 NDC path.
Till next time,
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