Invest in green bonds UNEP official urge Kenyans

Members of Mikoko Pamoja a community-led mangrove conservation and restoration project in Gazi Bay, Kwale planting mangroves in the area. PHOTO/PLAN VIVO

By PATRICK MAYOYO

Kenyans have been urged to support green bonds trading on the Nairobi Securities Exchange as part of efforts to conserve the environment.

The call was made by, Dr Jared Bosire, Programme Manager, UNEP ~ Nairobi Convention, who said that green bonds will play a key role in environmental conservation.

“Green bonds were created to fund projects that have positive environmental and climate benefits and in my view time has come for Kenyans to start taking investment in this area seriously,” he said.

Dr Bosire was speaking during a meeting bringing together journalists, environmental experts and the civil society under DUNIA journalism and climate emergency an initiative by the French government to strengthen the role of the media as a tool for monitoring and raising awareness on issues associated with climate change and its impacts.

DUNIA  journalism and climate emergency project that brings together more than 20 journalists from Ethiopia, Uganda and Kenya who include those from radio, print, online and television is expected to enhance the coverage of causes and consequences of climate change in East Africa.

The project is supported by the French government through the Directorate of International Department (CFI).

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.

Dr Bosire said the bond currently trading at the Nairobi Securities Exchange was an initiative of the Green Bond Programme – Kenya, which aims to promote financial sector innovation by developing a domestic green bond market.

The Green Bond Programme was initiated by the Kenya Bankers Association (KBA), Nairobi Securities Exchange, Climate Bonds Initiative (CBI), Financial Sector Deepening (FSD) Africa and FMO – Dutch Development Bank.

Dr Jared Bosire, Programme Manager, UNEP ~ Nairobi Convention. PHOTO/COURTESY

Kenya’s first green bond was listed for trading on the Nairobi Securities Exchange in January this year, offering investors the chance to put money into an environmentally-friendly fixed income security for the first time in the bourse’s 65 year history.

Green bonds raise capital for projects in renewable energy, energy efficiency, green transport and waste-water treatment.

The bond, worth 4.3 billion shillings ($42.5 million), was issued by Nairobi-based property developer Acorn Holdings to build student accommodation.

The green bond from Acorn followed new regulations by the Kenyan government last year that exempt investors from paying withholding taxes on their interest earnings from such bonds.

Green bonds have been issued all over the world with the European Investment Bank issuing the first green bond in 2007 followed by the World Bank in 2008. Corporates and municipalities entered the market in 2013.

Dr Kipkorir Sigi Langat, Principal Scientist at Kenya Marine and Fisheries Research Institute with members of Mikoko Pamoja during one the mangrove planting sessions. PHOTO/PLAN VIVO

The green bond market has seen strong growth, with the market really starting to take off in 2014 when USD37bn was issued. In 2018 issuance reached USD167.3bn, setting yet another record.

Global green bond issuance was expected to be $140-$180 billion last year according to HSBC, compared with $149.2 billion in 2018.

A green bond can be issued by a company (corporate entities), parastatals, and governments including counties.

For a project to qualify for financing through a green bond, the issuer has to commit to use the money only for green projects.

The green bond market has grown exponentially over the past five years, reaching Sh16.9 trillion ($167 billion) issuance in 2017. There is however more supply than demand.

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