The green bond market is developing in Africa. It is driven by major development finance institutions operating in Africa, such as the African Development Bank (AfDB). The financial institution based in Abidjan in Ivory Coast has just issued a series of green bonds on the capital market in the world. In the Australian market, the AfDB is issuing a 10-year A$50 million (over US$33 million) Kangaroo Bond under the theme “Lighting up and Powering Africa”, maturing on 8 March 2033.
This is one of the AfDB’s five priority areas to support Africa’s development. The “Light and Power Africa” area aims to help finance 160 GWh of new capacity to enable 130 million new power grid connections.
Japanese investment
This goal includes 75 million new off-grid connections, as well as the distribution of stoves and other clean cooking solutions to 150 million households. To reach this goal, the AfDB estimates that $60-90 billion per year would be required. The AfDB is expected to invest $12 billion of its own resources in energy financing over the next five years. The green bond issued in the Australian market was arranged by TD Securities and sold to Fukoku Mutual Life Insurance Company, an investor based in Tokyo, Japan.
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“Through this investment, Fukoku Mutual Life Insurance Company intends to support the bank’s initiatives in the energy sector and contribute to the development and deployment of specific clean and renewable energy solutions across Africa. This investment will also contribute to the achievement of the ‘Light up and power Africa’ priority of universal access to electricity on the continent by 2025,” the AfDB says.
The pan-African financial institution is issuing this green bond at a time when only 48% of Africans have access to electricity, according to the AfDB. At the same time, 90% of African elementary school do not have access to electricity, while 900 million people do not have access to clean cooking solutions, resulting in an estimated 600,000 deaths each year from air pollution related to the use of fuelwood for indoor cooking.
Jean Marie Takouleu