Kenya is ahead of the pack among nine African countries in the Absa Africa Financial Markets Index 2021 that have introduced products that can be classified as green or sustainable.
Only Kenya and Morocco ticked four broad categories of green financing including, green bonds, other sustainable bonds, green/sustainable equities, sustainable, exchange traded funds (ETFs) and sustainable mutual funds.
Kenya and Morocco scored highest having green or sustainable bonds, equities and mutual funds in their markets.
Additionally, Kenya has issued ethical securities to fund socially responsible investment opportunities.
Green bonds are the most popular instrument, currently being at investors’ disposal in seven countries.
Nine countries have introduced products that can be classified as green or sustainable. Green bonds are the most popular instrument, available in seven countries either in exchanges or over the counter, this year’s Abasa Africa Financial Markets Index report notes.
Kenya has led the way in facilitating green finance products to attract investors.
To encourage activity in the green bond market, Kenya implemented tax exemptions for interest earned.
Absa says the nine countries have policies that incentivize the issuance of sustainable financial products, including Kenya, whose Green Bonds Programme is encouraging the development of a green bond market domestically as well as across East Africa.
Kenya also plans to issue a Sovereign Green Bond and has drafted a framework that articulates the country’s governance on the funds raised from the issuance of the bond, including use of proceeds, the process for project selection and evaluation, management of proceeds, and reporting progress and impact requirements.
Proceeds of the Kenyan Sovereign Green Bond will be used to finance in whole or in part eligible green assets/projects that will be identified from the approved National Budget by Parliament.
In the private sector, Acorn, a Kenya-based real estate development company, successfully issued the country’s first certified green bond, raising Kes4.3 billion for the construction of environmentally-friendly student accommodation units in Nairobi.
The five-year bond is funding the construction of purpose-built accommodation for almost 5,000 university students across Nairobi.
The construction will meet international green building standards for water, energy and construction materials, ensuring lower operation costs and a low-carbon impact over the long-term.
With global trends turning focus on climate change, the Absa rankings puts Kenya on the map for potential green financial deals.