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Kenya gets ready for green bonds

Zachary Ochuodho @zachuodho

The National Treasury has asked Capital Markets Authority (CMA) to prepare the necessary framework for issuance of a Green Bond – expected before the end of 2018/19 financial year. A Green bond is a debt instrument, just like any other bond.

It offers fixed return and a promise to use the proceeds to finance or refinance, in part or fully, new or existing sustainable projects. The move is aimed at facilitating Kenya to tap into the first commercial bank-supported climate change-aligned corporate debt instruments.

Treasury Cabinet secretary Henry Rotich said the Government is supporting the Kenya Green Bond Programme, which aims at drawing on significant private sector demand for investment in the environmental project. In a speech read yesterday by director-general budget, fiscal and economic Affairs Geoffrey Mwau, Rotich said Green bond markets provide an alternative source of long-term green finance in addition to bank lending and equity finance.

“I would request Central Bank of Kenya and Kenya Bankers Association (KBA) as well as all financial sector regulators to support the national Treasury in scaling up the market to raise awareness and support capacity building and knowledge sharing on Green Bond initiatives,” said Rotich.

Mwau said Treasury was happy to see the banking industry introduce the Principles of Sustainable Development Finance – which will go a long way in ensuring not only efficient and profitable but also other concerns of environmental and economic sustainability and social good.

Speaking during the 2017 Sustainable Finance Catalyst Awards ceremony, KBA chief executive Habil Olaka said while banks play a critical role in the financial sector, the impact of the banking industry contribution greatly hinges on the quality of decision made in the institutions.

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