Green Bond Stakeholder Consultation Forum
Nairobi, Thursday 24 May 2018 – The National Treasury in conjunction with the Green Bonds Program Kenya, a partnership between Kenya Bankers Association (KBA), Nairobi Securities Exchange (NSE), Climate Bonds Initiative (CBI) Financial Sector Deepening Africa (FSD Africa) and FMO have today hosted a stakeholder forum focused on building the Green Bond market in Kenya.
Kenya’s long and medium-term policies underpin a pathway to sustainable and resilient growth characterised by a healthy environment. Infrastructure development plans, currently financed mostly through the public budget and commercial bank lending, will need to see an increased participation of private sector capital if the goals set in the Vision 2030 are to be met.
Green bonds are a tool for tapping into institutional investor demand for green and climate resilient investments and to finance green and inclusive growth. The green bond market globally has grown exponentially over the past 5 years, reaching approximately USD 155.5 billion in 2017, largely driven by investor demand. For example the number of institutional investors that have signed on to the UN-backed Principles for Responsible Investment amounts to 1,700 with combined assets under management of USD 70 trillion (one third of global private capital).
The Kenyan Green Economy Strategy and Implementation Plan (GESIP) has identified an investment need of KES 2.4 trillion (USD 23.5 billion) associated with the shift to the national green growth path. This national green growth path offers opportunities for investment, employment creation and poverty reduction and will result in improved social welfare, higher agricultural productivity, opening up new opportunities in green jobs and will overall result in a higher GDP growth rate than business as usual.
The Green Bonds Program Kenya launched in March 2017 has the objective to help build the green bond market in Kenya to enable investment in the green economy and create long-term profitability and value creation for business, investors and society alike. The program activities include support for potential issuers, investor sensitization, engagement on incentives for green bonds, and building the local capacity for green bond certification.
In his keynote address, Dr Kamau Thugge, CBS, Principal Secretary, National Treasury reiterated in order to achieve the new paradigm of a low carbon, green economy development path, can only be possible by working and pulling resources together – globally, regionally, and nationally and jointly between the public and private sectors. He further noted that a sovereign or corporate green bond issuance would be the first in East and Central African region, and affirmed the Governments unwavering commitment towards this cause.
During the event, Dr. Patrick Njoroge, Governor of the Central Bank of Kenya, reiterated that the CBK has strong convening power especially in regards to issues related to the financial sector. In his speech, he emphasised the urgency of investing in sustainable development now, for the sake of current and future generations.
Mr Muthaura, the CEO of the Capital Markets Authority, highlighted that according to the African Development Bank (AfDB), financial requirements to adapt to climate change are projected to be between US$20 and US$30 billion annually until 2030. These can only be met through diversification of financing mechanisms and sources of funding. It is therefore clear that there is both unquestioned demand and based on growing pools of sustainable funds, there is also supply. Therefore the focus by all the stakeholders must be to enable the effective intermediation to unlock the capital flows.
Today’s event is significant because it marks a strengthened collaboration with the government on the development of the green bond market in Kenya. The event marks the launch of the National Steering Committee on Green Bonds and will enable the establishment of a roadmap for the development of the green bonds market.
About the program partners
Green Bonds Program Kenya
The Green Bonds Program - Kenya is a multi-year program with the objective to build the domestic green bond market and to support the first green issuances come to market.
The Program is a partnership between Nairobi Securities Exchange (NSE), The Kenya Bankers Association (KBA), Climate Bonds Initiative (CBI), Financial Sector Deepening Africa (FSD Africa) FMO – The Dutch Development Bank. The program is endorsed by the Central Bank of Kenya (CBK), Capital Markets Authority (CMA) and the National Treasury.
Kenya Bankers Association
KBA (www.kba.co.ke) was founded on 16th July 1962. Today, KBA is the financial sector’s leading advocacy group and banking industry umbrella body that represents total assets in excess of USD 37 billion. KBA has evolved and broadened its function to include advocacy on behalf of the banking industry, and championing financial sector development through strategic projects such as the launch of the industry’s first P2P digital payments platform PesaLink. In line with the Government’s policy on public-private partnerships, KBA and Central Bank of Kenya have implemented key projects such as modernization of the National Payments System through the Automated Clearing House, implementing the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative. The KBA members are comprised of commercial banks and deposit taking microfinance banks.
Nairobi Securities Exchange (NSE)
The NSE is a company established under the Companies Act, Cap 486 of the Laws of Kenya (as amended) and is licensed by the Capital Markets Authority to promote, develop, support and carry on the business of a securities and derivatives exchange and to discharge all the functions of a securities and derivatives exchange under the applicable Laws of the Republic of Kenya.
Climate Change Initiative (CBI)
The CBI is a private company limited by guarantee, established under the Companies Act 2006 of the United Kingdom and registered as a charity in England and Wales, and mandated to work for the preservation and conservation of the environment for the public benefit.
FSD Africa is a non-profit company which aims to increase prosperity, create jobs and reduce poverty by bringing about a transformation in financial markets in SSA and in the economies, they serve. It provides know-how and capital to champions of change whose ideas, influence and actions will make finance more useful to African businesses and households. It is funded by the UK aid from the UK Government
FMO is the Dutch development bank. FMO has invested in the private sector in developing countries and emerging markets for more than 45 years. With a mission to empower entrepreneurs to build a better world, FMO invests in sectors where their contribution can have the highest long-term impact: financial institutions, energy and agribusiness. Alongside partners, invests vary in the infrastructure, manufacturing and services sectors. With an investment portfolio of EUR 8.8 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. www.fmo.nl.