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The Success of East Africa’s Debut Green Bond Issue Sets Stage For More Eco-Friendly Finance Offers

Updated: Jul 10


This year, Kenya earned the impressive distinction of being the first country in the East and Central Africa region to successfully issue a green bond. The milestone entrenched the position of Kenya’s financial services sector as the regional pace-setter in the adoption environment-friendly financing options. It further reaffirmed the industry’s commitment to align itself towards making a progressive contribution to the country’s national development agenda.

Supported by the Green Bonds Program – Kenya, guaranteed by GurantCo and structured by Stanbic Bank, the bond was issued by real-estate firm Acorn Holding Africa. And as at October, 2019 the green capital drive had successfully raised Kshs. 4.3 billion. The funds will be channelled towards building 5,000 environment-friendly and affordable student housing in Nairobi and its environs, supporting a key pillar of the Government’s Big Four Agenda – Affordable Housing.

The bond followed efforts by the Green Bonds Program - Kenya (GBPK), brought together by the Kenya Bankers Association (KBA). Partners in the programme include Nairobi Securities Exchange (NSE), Climate Bonds Initiative, Financial Sector Deepening (FSD) Africa and FMO - Dutch Development Bank. The programme has also benefitted with technical support and guidance from the International Finance Corporation (IFC) and the WWF - Kenya.

Endorsed by the National Treasury, Central Bank of Kenya and Capital Markets Authority, Central Bank of Kenya Governor Dr. Patrick Njoroge is the Programme’s patron, with KBA serving as the Program’s Secretariat. It is through the efforts of facilitating a policy and regulatory framework that Acorn’s issuance was possible.

Since its inception, the GBP-K has been conducting research on the potential of green bond issuance in Kenya, keen on developing a pipeline of green investments by engaging with local and international investors. Aiding demonstration of green bond issuance from leading banks and corporates has also been among the focus areas of the team.

Other necessities for issuance of a green bond in Kenya included promoting green Islamic finance, developing a pool of Kenya-based licensed verifiers, creation of of a cooperative fixed income fundraising facility that would allow smaller banks and corporates to take advantage of wholesale debt capital markets, and leveraging the Kenya experience to catalyze similar programs across East Africa Community.

In his remarks during a forum held in Nairobi to commemorate the inaugural green bond issuance, CBK Governor Dr. Patrick Njoroge lauded the development as a major step for Kenya towards facilitating a better environment. “ The Central Bank of Kenya is committed to support the Green Bonds Programme Initiative in Kenya to achieve its objectives,’’ he said.

The Governor’s observations were echoed by National Treasury Principal Secretary Dr. Julius Muia, who said Acorn's green bond would provide for the urgently needed student housing in the country, in light of the Government’s Big Four Agenda.

On his part, Kenya Bankers Association, Chief Executive Officer, Dr. Habil Olaka stated that the Association was also proud of the immense efforts by the Green Bonds Program – Kenya Partners and Stanbic Bank in ensuring the feat was achieved.

“As a champion for Sustainable Finance practices in the financial services sector, KBA applauds Acorn for the sustained work put in towards the issuance of East Africa’s first green bond,’’ said Dr. Olaka adding that the development would aid Kenya’s transition into a green economy.

Stanbic Bank, which facilitated the initiative expressed its delight in being associated with Kenya’s first green bond. “We are looking forward to work with more innovative structures like this through our investment banking team based here in Kenya to help deepen financial services and help achieve the agenda of Kenya through financing projects,’’ said Stanbic Bank’s Head of Investment Banking-Kenya, Mr. Jonathan Muga.

A pioneer in successful issuance of a green bond, CEO Mr. Edward Kirathe appreciated the support the organisation has received from partners.

GuarantCo CEO Mr. Lasitha Perera noted that university students have limited options for accommodation during their education in Nairobi. “This is why we are joining forces with Acorn to pioneer the first ever green bond in Kenya and lead the way by setting new standards of quality, safety, convenience and comfort,’’ he added.

Nairobi Securities Exchange (NSE), Chief Executive Officer, Mr. Geoffrey Odundo observed that the launch of the bond marked an important milestone for the capital markets in Kenya and the region, noting that the success sent a message that local investors are keen to see the green bonds market succeeds towards addressing sustainable finance needs.

FSD Africa Director, Mr. Mark Napier also congratulated Acorn and all those involved in the Green Bonds Programme Kenya on the achievement. He added, “We are proud to have played our role in creating the standards that will enable Kenya to contribute to the massive growth in sustainable investment that we have seen across the globe.”

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