Kenya is well on the path to becoming the third country in sub-Saharan Africa after Nigeria and South Africa to float a sovereign green bond, Treasury Principal Secretary Kamau Thugge said on Thursday, to partly bridge the Sh562.7 billion deficit in next financial year’s budget.
Dr Thugge did not, however, disclose the size of the bond whose proceeds go into climate change-aligned projects, but insisted they were looking to float it between July and June next year.
Green bonds are becoming increasingly popular globally as countries race to mitigate the devastating effects of global warming in line with the Paris Agreement of December 2015.
Proceeds from such issues go into supporting projects that promote environmental conservation in sectors such as energy, agriculture, waste management, water, transport and urban planning.
The size of global green bond market nearly doubled last year to $155 billion (Sh15.66 trillion) from about $82 billion (Sh8.28 trillion), with Nigeria becoming the first in Africa to float a $30 million (Sh3.03 billion) paper last December to fund renewable energy and afforestation projects in its budget.
Kenya needs about Sh2.4 trillion to support green economy activities in areas such as afforestation, renewable energy and public transport, a stakeholder workshop heard in Nairobi.
“The sovereign green bond will represent new stage in the development of Kenya’s capital markets and open way for further corporate and international investments,” Dr Thugge said today.
“A green bond is part of government’s plan to secure alternative funding options...It will be the first in East and Central Africa.”
The proposed bond will, however, await issuance guidelines from the Capital Markets Authority.