Tanzania is entering the green bond market. The first bond was recently issued by the Tanga Urban Water Supply and Sanitation Authority (Tanga Uwasa), which hopes to raise 53.12 billion Tanzanian shillings (more than $20.8 million) through this financial operation.
“The aim is to raise funds to enable the company to increase its production of drinking water with a view to achieving universal coverage in the city of Tanga, compared with 96% at present, and to support its environmental conservation efforts in the city and neighbouring towns”, says Tanga Uwasa, which also supplies the towns of Muheza and Pangani in Tanzania. The company also collects and disposes of wastewater in the three cities.
This transaction will be supported by Financial Sector Deepening (FSD) Africa, a Kenyan development agency, financed by UK International Development, which provided technical assistance.
Towards the diversification of water financing in Tanzania?
At the same time, the $20.8m green bond will be listed on the Dar es Salaam Stock Exchange (DSE), offering a yield of 13.5%, paid semi-annually.
The success of this experiment could encourage other players in the Tanzanian water sector to issue green bonds to finance green initiatives in this East African country, which is aiming for universal access to drinking water by 2030. Currently, water coverage is 86% in urban areas and 72.3% in rural areas.
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“This bond and others like it will also reduce pressure on the Tanzanian government’s budget by strengthening capital in the country, and will allow it to focus on priority social initiatives that cannot be financed through commercial windows,” says Philip Mpango, Tanzania’s Vice President.
Inès Magoum