Kenya closed its first ever green bond today, with support from the UK. The green bond will raise funds to provide 5,000 university students with environmentally-friendly, affordable housing in Nairobi.
The KSh 4.3 billion bond, a first for East Africa, is a milestone in Kenya’s transition to a low-carbon economy, and national vision of being a centre of financial excellence in the region.
The UK has been working with the Kenyan government to develop capital markets and attract private finance. Since 2015, UK aid has funded FSD Africa’s work with the Capital Markets Authority and their green bond programme, which created the regulatory framework for green bonds in Kenya.
International Development Secretary Alok Sharma said:
“The UK is mobilising private sector investment to help African nations make the most of their enormous potential. We are leading the way in the listing of green bonds, with over 100 bonds listed on the London Stock Exchange.
“The growth of the green bond market in East Africa is supporting vital climate resilient infrastructure and helping provide 5,000 students in Kenya with environmentally-friendly, affordable housing. I look forward to building on this success at the UK-Africa Investment Summit next year.”
Issued by Acorn Holdings, the bond has been certified as green by the UK Climate Bonds Initiative due to its expected contribution to reducing carbon emissions, after funding and support from UK aid. The bond is also the first Kenyan corporate bond rated by an international ratings agency.
UK aid funded GuarantCo has also provided a partial guarantee to reduce the risk to investors who buy into the bond. This helped to raise the full amount of the bond and make it a success.
CEO of Acorn Holdings Ltd Edward M. Kirathe said:
“Acorn is delighted to have successfully pioneered the issuance of Green bonds in Kenya. We are truly grateful for the unprecedented support we have received from UK DFID supported entities – especially GuarantCo and FSD Africa without which it would not have been possible to bring this bond to Market.”
This is an example of how the UK is sharing its experience of delivering clean growth, having cut our emissions by over 43% whilst growing the economy by 71% since 1990. The UK was the first country to introduce legally binding emission reduction targets through the 2008 Climate Change Act.