•The sovereign green bond issue is set to bolster Kenya's reputation as a financial innovator
•Proceeds from green bonds are used to finance projects in the renewable energy, energy-efficiency, green transport and wastewater treatment sectors
Kenya plans to issue a sovereign green bond within the next few months, Central Bank governor Patrick Njoroge has said.
In an interview with Reuters, on the sidelines of the World Economic Forum held in Davos, Njoroge who did not give a definite issue date said plans were underway to issue the bond.
“The expectation is that we do it very quickly, within the next few months,” he said.
Proceeds from green bonds are used to finance projects in renewable energy, energy efficiency, green transport, and wastewater treatment sectors.
The government initially aimed to raise $50 million (Sh5.04 billion) through the green financing facility.
“The sovereign green bond will be coming on stream, but also other products, meaning other corporate green bonds,” Njoroge said.
“This is not just for the sovereign green bond, it’s really for all financing in the country, be it domestically,” he said.
The government has been postponing plans to issue the green bond having started discussions in 2016, and announcing it would be issued first in 2017.
While the government has continually mooted plans to issue the sovereign green bond, commercial banks have also been planning to issue the bond having already come up with guiding principles.
“Our view is that in the future all financing will be green,” Njoroge said.
Plans for a green sovereign issue by Kenya will follow after the first issue of the Sh4.3 billion corporate green bond issued by Acorn Holdings at the beginning of the month. The green bond was later cross-listed at the London Stock Exchange.
British real estate developer Acorn, which raised 85 per cent of its targeted Sh4.3 billion, had planned to complete the Sh810 million Nairobi West Qwetu by December last year to serve several universities and colleges including Strathmore University.
This year, the real estate firm plans to complete the Sh880 million Qwetu 3 United States International University Africa (USIU-A), and Sh740 million Qwetu 4 USIU-A by May 2021.
The sovereign green bond issue is set to bolster Kenya's reputation as a financial innovator.
Njoroge said that the government needs to take austerity measures to relieve the current debt burden currently at Sh5.9 trillion.
“We need to strengthen financial management, financial control and an important element there is decisions on investment,” he said.