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Wednesday, August 23, 2017

Banks tap IFC expertise in packaging green bonds

Habil Olaka the new CEO of Kenya Bankers Association./FILE
Habil Olaka the new CEO of Kenya Bankers Association./FILE

Commercial banks have entered into a partnership with the IFC to build capacity for planned green bonds, underlining Nairobi's bid to rival South Africa's Johannesburg as a leading financial services hub on the continent.

The initiative aims at mobilising funds for projects that promote sustainable environmental conservation. Sectors targeted are energy, agriculture, transport, infrastructure, building and urban planning and, water and waste management.

International Finance Corporation – the World Bank Group's private sector lending arm – will provide technical support for banks planning to float green bonds, Kenya Bankers Association, the industry's lobby group, said in a statement yesterday.

“There is a great opportunity for banks to attract funding aligned to climate change issues and we welcome the technical assistance and advisory support from IFC towards this end,” KBA chief executive Habil Olaka said.

KBA partnered with the Nairobi Securities Exchange to host the inaugural investors' sensitisation forum on August 8 last year. The forum followed United Nation's Sustainable Stock Exchanges executive dialogue on green finance held during last July's week-long UNCTAD Conference in Nairobi.

The National Treasury, Central Bank of Kenya and Capital Markets Authority are also involved in the plan facilitated by the KBA's Sustainable Finance Initiative. This is in a bid to position Nairobi as a leading financial services centre, with a long-term view of playing in the same league as Johannesburg, London, New York, Tokyo, Zurich and Dubai.

“We were leaders in mobile money as a country; we can be the leaders in green financing,” Olaka said in an interview on February 16. “It is part of our sustainability initiative in the country.”

The value of green bonds issued globally last year more than doubled, jumping 120 per cent to $93.4 billion (aboutSh9.63 trillion), with credit rating firm Moody's projecting the value to cross $200 billion (about Sh20.62 trillion) this year helped by the 2015 Paris Climate Agreement.

“The world continues to aspire for green and inclusive growth and we urge our listed and non-listed entities to embrace the green bond market as an innovative and alternative way of raising finance from both domestic and external sources for sustainability-driven investments,” NSE chief executive Geoffrey Odundo said.

IFC has led green finance initiatives in other markets, including South Africa and Turkey. The World Bank's arm injected about $3.3 billion (about Sh340.26 billion) into “climate-smart projects” comprised of $2 billion (about Sh206.22 billion) in investments and $1.3 billion (about Sh134.04 billion) in mobilisation. IFC Advisory Services further help arrange for $1.2 billion (about Sh123.73 billion), which was invested in climate-related investments in power, resource efficiency, green buildings, and public-private partnerships.

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