Africa’s sustainable finance panorama continued to evolve in 2024, with inexperienced devices rising as a dominant pressure within the continent’s labelled debt market.
In line with Customary & Poor’s (S&P) newest report titled “Sustainable finance is rising in Africa, however volumes fall in need of addressing wants”, African issuers raised an estimated $13 billion in labelled debt final 12 months.
The report says practically 40% of this quantity got here from inexperienced devices—bonds and loans expressly tied to tasks that ship measurable environmental advantages.
These inexperienced devices are more and more engaging to governments, corporates and development-focused issuers looking for lower-cost capital whereas strengthening their local weather credentials.
“Labeled debt raised by African issuers totaled roughly $13 billion in 2024, in line with the Environmental Finance database. Nearly 40% of this quantity was raised by inexperienced devices, or bonds and loans the place issuers or debtors decide to allocating an quantity equal to web proceeds towards financing tasks with clear environmental advantages,” S&P acknowledged.
S&P notes that whereas sustainability-linked devices have historically dominated the mortgage phase, they continue to be a significant software, notably for corporations in hard-to-abate sectors equivalent to heavy business, mining, and logistics.
“African governments can use sustainability-linked bonds and loans to formalize and strengthen sovereign sustainability commitments to exterior stakeholders,” S&P famous.
Different key sectors lag behind in local weather finance
In line with S&P, whereas inexperienced, social and sustainability (GSS) bond allocations largely assist renewable vitality investments—essential for addressing Africa’s vitality transition and shutting the electricity-access hole—different key sectors proceed to lag behind.
“Many of the allocation from inexperienced, social and sustainable bonds goes to renewable vitality tasks, that are key to addressing Africa’s vitality transition wants and guaranteeing broader and extra secure entry to electrical energy. In the meantime, underfunded areas equivalent to local weather change adaptation, water safety and biodiversity preservation could profit from broader financing methods,” S&P report acknowledged.
What it’s best to know
On June 16, the Federal Authorities launched its N50 billion Sequence 3 Sovereign Inexperienced Bond, aimed toward financing environmentally sustainable tasks that mitigate local weather change and assist long-term financial resilience.
The Debt Administration Workplace (DMO) introduced the conclusion of the third Sovereign Inexperienced Bond issuance, which closed with a formidable whole subscription of N91.42 billion.
The DMO famous that traders had been allotted a complete of N47.355 billion at a coupon of 18.95% every year.
In line with the DMO, the Sequence 3 Inexperienced Bond will finance a number of precedence tasks:
- N15.960 billion allotted to the Federal Ministry of Surroundings for local weather change adaptation and mitigation efforts.
- N15 billion directed towards Pi-CNG’s clear vitality transition initiative, accelerating Nigeria’s shift towards cleaner gasoline sources.
- N9.320 billion designated for the Federal Ministry of Water Assets to assemble three earth dams supporting water conservation.
- N6 billion earmarked for the Dange Earth Dam challenge to strengthen irrigation and water safety.
- N1.075 billion will fund the rehabilitation and upgrading of the Buruku/Gboko water provide challenge, enhancing entry to potable water.