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Kenya’s first green bond raises $41.45 million

Kenya has gotten its very first green bond. Stanbic Bank in Kenya, who arranged the deal, announced the arrangement. It has raised $41.45 million (4.3 billion Kenyan shillings), according to the bank. The bond will be used to build climate-resilient student accommodation in Nairobi.

Nairobi-based property developer Acorn Holdings issued the bond. In February, new rules were issued in Kenya to guide the green bond issuance.

Bloomberg says:

The notes are certified under the Climate Bonds Standard, which ensures the money genuinely contributes to reducing carbon emissions.

Acorn’s offer follows the highest global issuance of sustainable bonds with $267 billion raised in the first nine months of 2019, exceeding last year’s total of nearly $260 billion.

Kenya’s 31 universities can house only 25% of the nation’s students, forcing thousands others to seek alternative shelter, Acorn said, citing official data.

Stanbic said the issue was looking to raise between 2 billion and 5 billion shillings. The bond is “well diversified with significant interest from Kenyan domestic pension funds, commercial banks, insurance and reinsurance companies and non-resident funds.”

According to Reuters, “the bond was priced at an interest rate of 12.25% and rated B1 Global, a notch above the Kenyan government’s rating of B2.”

Nuru Mugambi, a director at the Kenya Bankers Association, said that green bonds will help protect Kenya from the impact of extreme weather on the agriculture sector, which contributes about one-third of the annual GDP. She said:

With the landmark legislation that zero-rates taxes on green bonds, we expect to see more issuance coming to market.

According to Green Bonds Programme — Kenya, the objectives are:

  1. Researching the potential of green bond issuance in Kenya
  2. Developing a pipeline of green investments and engaging
    with local and international investors
  3. Supporting demonstration green bond issuance from leading banks and corporates
  4. Promoting green Islamic finance
  5. Developing a pool of Kenya-based licensed verifiers
  6. Development of a cooperative fixed income fundraising facility that would allow smaller banks and corporates to also take advantage of wholesale debt capital markets
  7. Leveraging the Kenya experience to catalyze similar programs across East Africa Community

Electrek’s Take

This is another great step forward for Kenya, who are already green energy leaders in the global movement. Kenyan president Uhuru Kenyatta announced in December 2018 that the country intends to be powered entirely by green energy by 2020 as it scales up renewable investment. This is an ambitious and laudable target.

As of December 2018, 70% of the country’s installed electricity capacity came from renewable energy sources — more than three times the global average. Green energy could increase the population’s access to the national power grid, create jobs, and reduce manufacturing costs.

The country was Africa’s first geothermal power producer. By 2020, according to USAID, it is expected that 70%-80% of the population will have access to on-grid electricity, compared to less than 46% in 2015. Further, 20% to 30% of the population will potentially receive access to off-grid electricity, primarily through solar, by 2020.

Photo credit: Lake Turkana wind project

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Avatar for Michelle Lewis Michelle Lewis

Michelle Lewis is a writer and editor on Electrek and an editor on DroneDJ, 9to5Mac, and 9to5Google. She lives in St. Petersburg, Florida. She has previously worked for Fast Company, the Guardian, News Deeply, Time, and others. Message Michelle on Twitter or at Check out her personal blog.