International Finance Corporation Signs on to Support Kenya Green Bonds Program
Nairobi, Friday, March 14, 2017 - Banks, under the umbrella body of the Kenya Bankers Association (KBA), have signed a Memorandum of Understanding (MOU) with the International Finance Corporation (IFC), and Nairobi Securities Exchange (NSE) with the purpose of spurring the development of the banking industry's green bonds program through individual bank issuances.
The collaboration between KBA, the IFC and the NSE will aim to provide KBA member banks with technical support in green finance in conjunction with other climate finance initiatives undertaken by IFC in other markets, including South Africa and Turkey. The partnership will also serve to support Kenya's Vision 2030 ambition to become a leading financial centre in Eastern and Southern Africa and one of Africa's fastest-growing economies. KBA Chief Executive Officer, Habil Olaka, acknowledged IFC's global experience in sustainable finance. The IFC fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services to businesses and governments.
In 2016, IFC's climate-related investments were close to $2 billion and an additional $1.3 billion was raised through core mobilization, for a total of $3.3 billion invested in climate-smart projects. In addition, through its Advisory, IFC enabled more than $1.2 billion in climate-related investments in power, resource efficiency, green buildings, and public-private partnerships. Especially, in 2016 new green bond-financed commitments were close to $1 billion worth invested in 35 projects across 22 countries, including 16 new markets.
"There is a great opportunity for banks to attract funding aligned to climate change issues and we welcome the technical assistance and advisory support from IFC towards this end," said Mr. Olaka. "The sectors in Kenya that require green finance include agriculture and agribusiness; manufacturing; building and construction; transportation and infrastructure; energy, among others. There is no shortage of investment opportunity. Therefore, we hope banks in this market will consider how they can tap this investment opportunity towards building their portfolios while also contributing to Kenya's sustainable development," he said.
The Nairobi Securities Exchange Chief Executive, Geoffrey Odundo said that the NSE was enthusiastic that Kenya had the opportunities for green finance and banks would be able to tap the capital markets to attract new investors with dedicated allocations aligned to climate change mitigation and adaptation, as well as the Sustainable Development Goals.
"The Exchange fully supports green financing and we see huge growth potential for the sector," said Mr. Odundo. "The world continues to aspire for green and inclusive growth and we urge our listed and non - listed entities to embrace the green bond market as an innovative and alternative way of raising finance from both domestic and external sources for sustainability-driven investments. The introduction of the issuance of green bonds will increase the priority for sustainable development within the region," he said.
With IFC's support, banks in Kenya will review their portfolios to identify climate-aligned (green) assets that can be refinanced as well as new assets that would form the pipeline to be financed from the green bond proceeds. IFC has also committed to catalyse Kenya's green bond market by serving as an anchor investor for the pioneer issuance.
NOTE TO EDITORS:
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it's needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About 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 which introduced the use of information collateral provided by credit reference bureaus to enhance credit access for borrowers. The KBA members are comprised of commercial banks and deposit taking microfinance banks.
About the Nairobi Securities Exchange
The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is a full member of the Association of Futures Markets (AFM) and an affiliate member of the World Federation of Exchanges (WFE), and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE).