AfDB partners int’l development finance institutions to promote green bond markets in Africa

The African Development Bank (AfDB) Group says it signed a partnership agreement with the coalition of development finance institutions to promote green bond markets in Africa.

Hassatou N’Sele, AfDB’s Group vice president and chief financial officer, disclosed this in a statement issued on Friday. 

N’Sele signed the declaration with representatives of the coalitions’ institutions on the sidelines of the 2023 UN Climate Change Conference (COP28) in Dubai, United Arab Emirates.

According to N’Sele, Africa’s engagement in the green bond market currently represents less than one percent of the more than $2.2 trillion community green bond issued in 2022.

She said the engagement was to tap from the global green bond initiative technical assistance programme announced by Ursula von der Leyen, president of the European Commission in June 2023.

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.

“The Initiative will help private capital flow from institutional investors into climate and environmental projects in EU partner countries, increasing their access to capital,” N’Sele said.

“Providing technical assistance to green bond issuers in emerging markets and developing economies (EMDEs), and crowding in private investors through a dedicated de-risked fund.

“This will act as an anchor investor in green bonds issued in EMDEs.

“The anticipated impact can be up to 15-20 billion euro in green investments.”

N’Sele said the institutions in the Global Green Bond Initiative (GGBI) comprised the European Investment Bank, the European Bank for Reconstruction and Development, and Italy’s Cassa Depositi e Prestiti.

Others are the Spanish Agency for International Development Cooperation, the Green Climate Fund and Germany’s KfW development bank, while PROPARCO of the AFD Group acts as a consortium of European development finance institutions.

She said the partners supported the origination of green bonds, the development and identification of pipelines of green projects, as well as the development of credible and coherent green bond frameworks.

“This joint declaration among us to collaborate on technical assistance on green bonds in Africa is our commitment to work together and it is significant and impactful,” she said.

“There cannot be impactful development in Africa without vibrant local capital markets.”

N’Sele highlighted the AfDB’s engagements in the green bond market, including issuing over $10 billion worth of green and social bonds in 2022 to support sustainable progress across Africa.

“Let’s help Africa fully leverage the power of green bonds, and we can contribute together towards a sustainable future for Africans,” she said.

On his part, Stefano Signore head of unit, the European Commission’s partnerships directorate described the collaboration with the AfDB as an important milestone in efforts to mobilise green bonds in emerging developing economies.

According to the statement, representatives of the Spanish Agency for International Development Cooperation (AECID) said the partnership would contribute to the intensification of climate and environmentally relevant projects.

They also expressed willingness to contribute to the mobilisation of the global green bond initiative.