The Treasury yesterday remained guarded on the size oand tenor of a sovereign green bond it will be issuing to fund climate change-aligned projects in the financial year starting July.
Principal secretary Kamau Thugge though said Kenya will be looking to become the second country in Africa to raise cash from investors to finance environmentally friendly projects.
Kenya needs about Sh2.4 trillion to support green economy activities in areas such as afforestation, renewable energy and public transport, a forum on development of green bond market heard in Nairobi Thursday.
Nigeria last December became the first country in the continent to tap into globally popular instruments, raising $30 million (Sh3.03 billion) to fund renewable energy and afforestation projects.
Climate Bond Initiatives data show the size of global green bond market nearly doubled last year to $155 billion (Sh15.66 trillion) from about $87.2 billion (Sh8.81 trillion) in 2016, as countries race to mitigate global warming in line with the Paris Agreement of December 2015.
Proceeds from such issues go into supporting projects which promote environmental conservation in sectors such as energy, agriculture, waste management, water, transport and public transport.
Dr Thugge said proceeds from the proposed green bond issue will partly help offset the projected Sh282.5 billion external financing for the Sh562.7 billion budget deficit next financial year, projected at Sh2.53 trillion.
“This will be part of external financing. We would like to move as quickly as possible so that projects can be funded as quickly as possible. There are many projects in the budget. We will identify the green projects,” he said.
Central Bank of Kenya governor Patrick Njoroge said the bank was looking at tax exemptions for green bonds in partnership with the Treasury to encourage uptake.
Floods and drought linked to effects of climate change are wiping out 5.5 per cent of Kenya’s gross domestic product (GDP) after every seven years, Dr Njoroge said, echoing CMA chief executive Paul Muthaura and Kenya Bankers Association vice chair John Gachora.
“Floods and drought are our problem. If we don’t do the right thing right now, it will come back to bite us. When that time comes, it will put us in a disorderly way,” Dr Njoroge said.