Kenya has often been touted as a leading financial hub within Africa. But when it comes to green and sustainable bonds, our market appears to be in deep hibernation: even as US company Burn unveils a $10 million (Sh1.5 billion) green bond to fund clean stove manufacturing in Kenya and Nigeria.
In reality, this one issue — of a bond where the funds are for an assigned purpose in reducing air pollution and carbon creation from home cooking on open fires — is a little piece of green bond washback to Kenya from a far more active and dynamic market in Nigeria.
For, despite high hopes in 2019, when Kenya rapidly followed Nigeria’s first corporate green bond launch in Africa, by Access Bank, with a first for East Africa from real estate company, Acorn Holdings, our move into green bonds has been extremely slow.
As recently as March this year, Fitch confirmed, yet again, that the majority of all green bond issues have been in South Africa, with Nigeria, Morocco, Namibia and Mauritius following as the biggest issuers, a long way behind South Africa.
It’s a beauty parade in which Kenya isn’t earning a place at all: but what is stopping us? At the sovereign level, the will-they-won’t-they around the government’s first green bond has become like a generational friend: began with the launch of the country’s green bond programme in 2017, surfacing with the completion of its green bond framework in 2021, and now silent again.
For a government, managing a large and complex debt portfolio, more bonds present their own politics.
However, the barriers to the continent’s corporate green bonds are different again, as the same-old, same-old issue of size, according to Fitch.
As it is, virtually all of Africa’s non-sovereign green bonds to date have been issued by large financial institutions or by real estate investment trusts.
The Burn issue, therefore, marks a second departure, in its launch as a company bond. Yet at Sh1.5 billion, it remains far beyond the reach or needs of all but a handful of Kenyan corporates.
So our challenge remains in bridging from large bond tickets to much smaller corporate investment needs.
That is not to say the Green Climate Fund, and Africa Development Bank, are not working hard to achieve some level of tiered funding, raising funds for on-lending. But how do we create the trusts outside of real estate that can mobilise green lending to the rest of our corporate world in loan sizes it needs and can cover?
And, if we don’t, will our adaptation to warmer air and erratic seasons ever start to keep up with the pace at which they are hitting our health, livelihoods, and economy?
The writer is a development communication specialist.
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