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Green bonds demand forecast to hit Sh91 billion in a decade

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From left: Strategic Business Advisors Africa limited (SBA) Principal Consultant John Kashangaki, WWF Regional Sustainable Investment Manager Jackson Kiplagat and Kenya Bankers Association Director Research and Policy Jared Osoro during the launch of demand study on Green Finance by Green Bond Program in Nairobi on December 18, 2018. PHOTO | SALATON NJAU | NMG 

Kenya has a demand for climate-friendly bonds amounting to Sh91 billion in the next five to 10 years, newly released research indicates.

The project with the biggest green-financing demand within that period is bus rapid transport (BRT) in Nairobi and Mombasa with the projection that it can raise up to Sh36 billion.

The plan, which is expected to reduce the need for private car owners to drive to the city and reduce traffic congestion, was supposed to have been in place by now in Nairobi but is currently in limbo as the buses are yet to be deployed.

The research was carried out by Strategic Business Advisory (SBA) in partnership with the Kenya Bankers Association, among others.

The research presentation was done Tuesday at the Intercontinental Hotel by SBA principal consultant John Kashangaki. The study involved literature review and interviews with key informants in various sectors.

“The three critical sectors which the research selected as demanding green bond financing include agriculture, transport and manufacturing which have a combined GDP of almost 50 per cent. The pricing of the bonds needs to be competitive and simplified,” said Mr Kashangaki.

The other big project identified is the introduction of light rail around Nairobi and its metropolitan areas with green financing demand amounting to Sh144 billion.

In the short-term of the next one to two years, the total demand for the bonds stands at Sh8.7 billion with this being in such areas as livestock including insuring them, producing climate-smart animal feed and sustainable aquaculture.

During the launch of the research report, IDB Capital chief executive Karen Kandie said the organisation had the potential to issue a green bond, especially one aligned to the Big Four agenda as long as incentives such as tax exemptions were given.

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