Thirty-eight emerging market economies, including five countries in Africa, have initiated key banking reforms to drive development and fight climate change, according to the second Global Progress Report of the IFC-facilitated Sustainable Banking Network (SBN).
The SBN Global Progress Report shows that regulators and banking associations in countries in Africa are adopting national sustainable finance policies and voluntary principles as well as advancing green bond markets and innovative green lending policies.
“African countries will be among the hardest hit by climate change and Africa already faces daunting challenges around job creation and inequality,” said Kevin Njiraini, IFC’s Regional Director, Southern Africa & Nigeria. “Advancing sustainable finance is critical to help the region build competitive and resilient financial services that support inclusive economic development.”
In addition to providing practical resources for countries undertaking sustainable finance reforms, the report also highlights the knowledge shared by SBN members – a hallmark approach of the network. This includes country progress reports from SBN’s six African member countries: Egypt, Ghana, Kenya, Morocco, Nigeria, and South Africa.
Morocco for example led the region in the first green bond framework in 2016, which was expanded to include social and sustainability bonds in 2018. Through the Marrakech Pledge, Morocco is championing a continent-wide effort to foster green capital markets in Africa.
On its part, Nigeria issued the first sovereign green bond in the region at the end of 2017 and Nigeria’s Access bank issued the first Certified Corporate Green Bond in Africa in April 2019.
South Africa’s Johannesburg Stock Exchange introduced a green bond segment in 2017 as part of the country’s sector-wide approach to sustainable finance that includes banking, insurance, pension funds, and asset management.
Kenya’s Capital Markets Authority introduced green bond guidelines in February 2019 and saw the issuance of Kenya’s first green bond in September 2019 for affordable green student housing. Kenya has also introduced tax incentives for green bonds – a first in Africa.
Green Bonds are any type of bond instrument where the proceeds will be exclusively applied to eligible environmental projects. They are regulated instruments subject to the same capital market and financial regulation as other listed fixed income securities.
The SBN report is based on an innovative results-measurement approach developed by SBN members as they work to convert sustainable finance policy reforms into practical implementation and behavior change across the banking sector.