Kenya closes its first ever green bond

Times India Today | : Oct 04,2019 06:59 PM IST

Kenya, with support from the UK government, closed its first ever green bond yesterday, which will raise funds to provide 5,000 university students with environmentally-friendly, affordable housing in Nairobi.

The Ksh 4.3 billion bond, a first for East Africa, is a milestone in Kenya’s transition to a low-carbon economy, and national vision of being a centre of financial excellence in the region.

The UK has been working with the Kenyan government to develop capital markets and attract the private finance needed to deliver on the Big 4 Agenda. Since 2015, UK aid has funded FSD Africa’s work with the Capital Markets Authority and their green bond programme, which created the regulatory framework for green bonds in Kenya.

Speaking at an event celebrating the bond closing, British High Commissioner to Kenya Jane Marriott said:

I am delighted to help mark the arrival of East Africa’s first ever green bond here in Kenya today, which has been delivered with support from the UK.

This brings together two of the UK and Kenya’s partnership priorities: strengthening our economic partnership and working together to respond to climate change.

This bond will result in Ksh 4.3 billion supporting a Big 4 Agenda priority, investing in affordable, environmentally friendly housing for 5,000 students in Nairobi. This is great news for young Kenyans continuing their educations, and good news for the planet we share.

Issued by Acorn Holdings, the bond has been certified as green by the UK Climate Bonds Initiative due to its expected contribution to reducing carbon emissions, after funding and support from UK aid. The bond is also the first Kenyan corporate bond rated by an international ratings agency.

UK aid funded GuarantCo has also provided a partial guarantee to reduce the risk to investors who buy into the bond. This helped to raise the full amount of the bond and make it a success.

UK Secretary of State for International Development Alok Sharma said:

The UK is mobilising private sector investment to help African nations make the most of their enormous potential. We are leading the way in the listing of green bonds, with over 100 bonds listed on the London Stock Exchange.

The growth of the green bond market in East Africa is supporting vital climate resilient infrastructure and helping provide 5,000 students in Kenya with environmentally-friendly, affordable housing. I look forward to building on this success at the UK-Africa Investment Summit next year.

CEO of Acorn Holdings Ltd Edward M. Kirathe said:

Acorn is delighted to have successfully pioneered the issuance of Green bonds in Kenya. We are truly grateful for the unprecedented support we have received from UK DFID supported entities - especially GuarantCo and FSD Africa without which it would not have been possible to bring this bond to Market.

This is an example of how the UK is sharing its experience of delivering clean growth, having cut our emissions by over 43% whilst growing the economy by 71% since 1990. The UK was the first country to introduce legally binding emission reduction targets through the 2008 Climate Change Act.

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