Kenya launches first corporate green bond to help fight climate change
An inaugural corporate green bond was launched in Kenya on Thursday to help fight climate change.
Julius Muia, principal secretary at the National Treasury, told journalists in Nairobi that the debt instrument which is the first in the eastern and central Africa region was issued by Acorn Holdings and raised 4.26 billion shillings (about 41.3 million dollars) from investors.
Kenya is prioritizing green finance in line with the requirement of Paris Agreement in 2015, United Nations Agenda 2030, Africa Union Agenda 2063 as well as the national development blueprint Vision 2030, Muia said.
Muia said that Kenya's economy, like many others around the world, is still highly dependent on natural resources and remains profoundly vulnerable to the effects of climate change.
"Mainstream economic sectors such as agriculture, tourism, energy, health and infrastructure are at risk from climate change-related hazards such as droughts, storm surges, floods, and sea level rises along our coastline," he added.
The green finance instrument was made possible following the successful completion of the green bond rules and guidelines which were launched early this year by the Capital Markets Authority and Nairobi Securities Exchange.
The treasury official noted that the financial services sector has been experiencing unprecedented challenges, impacting not only the regulatory framework, but also on the environmental and social aspects of long-term financial returns.
"These effects are already being felt across the country in an unprecedented scale, hence the need for a coherent green fiscal policy and legislative frameworks to accelerate the paradigm shift towards the green economy by crowding in private sector investment," Muia said.
He revealed that the government is committed to transforming Kenya into a newly-industrializing middle-income country, providing a high quality of life for all its citizens in a clean, secure, and sustainable environment.
"In order to achieve this ideal, corresponding green financing and investments such as green bonds should form the basis of public and private financing mechanisms for the current and future development in our country," Muia said.
Gerald Nyaoma, director of bank supervision department at Central Bank of Kenya (CBK) said that the green bond which was issued by the Acorn Group which is a real estate development and management firm will be used to fund the construction of environmentally friendly student accommodation.
According to Nyaoma, the green bond is aligned to the objective of the Kenya Green Bond Programme, which anchors the private sector to promote sustainable development through climate-friendly investment in Kenya.
"Green bonds represent an important tool for Kenya to transition to a green economy, progress towards the Sustainable Development Goals and realize the vision of being a financial hub for the region," he added.
The CBK official said that climate-related financing is important to fight the perils of the rapidly heating planet given that global emissions have been rising.