Developing green bond markets for Africa

Africa is the world’s most vulnerable region to climate change. Rising temperatures, rising sea levels, and worsening erratic rainfall are increasing the frequency and intensity of natural disasters and disrupting agricultural production, damaging infrastructure and threatening the sustainability of urban areas. In addition, there is a need for continued economic development that is compatible with climate goals.

According to UNECA and the IMF, up to $50 billion a year is needed with the current lack of finance being a key barrier (IPCC, 2018). The expected public financing available from national governments and international donors is unlikely to be able to meet these needs. That means that private finance needs to be mobilised. One potential source of such private finance is the green bond market.

Globally, there have been a huge growth in the last decade with the market now reaching $2 trillion and 40 countries participating. This has been driven by complementary growth in the supply of green assets – most notably green infrastructure - and green investors who have emerged as a new and rapidly expanding investor class.