The African Development Bank (AfDB) is issuing its first green bond in South African rand. The proceeds of the bond will be used to finance green projects in several key sectors for Africa's green transition.
The green bond market is growing in Africa. The African Development Bank (AfDB) has issued a green bond in South African rand. The bond, arranged by Daiwa Capital Markets Europe, aims to raise 200 million South African rand (11.4 million dollars) in one year, maturing in September 2023. The bond is being sold on a private placement basis to a single Japanese institutional investor, Sony Bank.
According to the AfDB, the proceeds of the bonds will be used to finance green projects eligible for its Green Bond Programme. Launched in 2013, the programme has already helped finance several hydroelectric projects, including the Malagarasi project (44.8 MW) in Tanzania, as well as water management projects in Rwanda, Senegal, Kenya and Morocco. The programme, which has already financed 45 projects, also covers the renewable energy sector, including financing for the Yeleen project in Burkina Faso and the construction of the Noor Ouarzazate solar complex in Morocco.
Financing new green projects in Africa
This is the first time the AfDB has issued a green bond in South African rand. The previous 11 bonds were issued in US dollars, Swedish krona (SEK) and Australian dollars.
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“We are very pleased with the success of our inaugural green bond issuance in the form of a private placement in the South African rand market and acknowledge the role of Sony Bank in helping the AfDB broaden and diversify its investor base to support our objective of fostering green growth by financing eligible climate change projects and working towards the continent’s development goals (SDGs),” said Keith Werner, the AfDB’s Director of Capital Markets and Financial Operations.
According to the pan-African bank based in Abidjan, Ivory Coast, the proceeds of the green bonds will help build resilience to the negative effects of climate change, build sustainable infrastructure, develop ecosystems and promote the efficient and sustainable use of natural resources such as water, a sector particularly vulnerable to climate change across the African continent.
Jean Marie Takouleu