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The Nairobi County Government has declared that it will issue a green bond of KSh 150 billion ($1.2 billion). The financial instrument will be utilized to finance environmental infrastructure and accelerate green transition.
Kenya is facing severe droughts in recent times and the situation is undermining people’s livelihood in the country. Against this backdrop, the county government has planned to launch the green bond on the Nairobi Stock Exchange (NSE). These green bonds are typically asset-linked as well as backed by the issuing entity’s balance sheet.
The funds will be helpful in financing green energy, energy efficiency, and sustainable transport & water infrastructure. Kiprono Kittony, NSE‘s Chairman, said that the stock exchange is ready to guide the government in developing the green bond, which will look to tap into the growing green finance segment.
Once this financial transaction is complete, Nairobi will become the second county after Laikipia to issue a green bond in Kenya. The projects financed through the bond will contribute to Kenya’s adaptation to climate change.
In 2017, Kenya launched the Green Bond Program, an initiative that targets to promote innovation in the financial sector of the country by developing a local green bond market. The program is supported by several financiers including the German development agency KfW, Netherlands Development Finance Corporation (FMO), International Finance Corporation (IFC), and World Wildlife Fund (WWF).
Kenyan property developer Acorn Holdings secured KSh 4.3 billion ($35.7 million) in 2019 in a green bond managed by the South Africa-based financial institution, Stanbic Bank. The funds were used to finance Acorn’s green projects, including renewable energy production, sustainable waste and water management, construction of green student housing, etc.