The government plans to issue its first green bond in the next financial year to advance the green economy development agenda.

The Treasury in its draft 2018/19 Budget statement has indicated that it will help accelerate the uptake of new financial instruments such as sovereign green bonds.

“We are setting up a framework for issuing a green bond in the fiscal year 2018/19. We hope by that time the Capital Markets Authority (CMA) and other regulators will have put in place regulations and guidelines for the issuance of the bond,” said Geoffrey Mwau, Director-General, Budget Fiscal and Economic Affairs at the Treasury.

Speaking in Nairobi during the Kenya Bankers Association (KBA) Sustainable Catalysts Awards on Tuesday, Dr Mwau said the government has put in place policies that encourage players to be innovate, scale up and support climate change-resilient investments.

Green bonds are viewed as a an instrument of raising funds for activities that promote environmental protection in energy, agriculture, waste management, water, transport and urban planning.

Dr Mwau said the bond details will be determined when the government is ready to go to the market. It will be issued locally.

KBA chief executive Habil Olaka said the banking sector plans to use three alternative ways to issue corporate green bonds in future.

“Within the green bond programme, we have alternative ideas about how to issue. You can either have an individual bank within the banking sector going out to the market as a corporate and issuing a green bond. You can also have a combined facility where a number of banks can come together and issue a green bond through a collective vehicle,” said Mr Olaka.

“The third option is where a customer of a bank can go out as a corporate and issue a green bond. For example, KenGen which is a corporate customer in the banking sector can issue a green bond and for that we can support it,” said Mr Olaka.-BDA