Tanzanian bank CRDB has issued the country’s first green bond worth $300 million, saying it is targeting to raise up to Tsh55 million ($22 million) in the first year of the initiative christened Kijani Bond, which will be implemented over five years under a multi-currency medium term-note programme.
Further estimated yields are Tsh90 billion ($37.34 million) in 2024/2025, Tsh190 billion ($78.84 million) in 2025/2026, and Tsh200 billion ($83 million) in 2026/2027.
The bond has been pegged at a 10.25 percent interest per annum, payable twice a year, with public subscriptions for the first phase to be directly handled by CRDB from August 31 to October 6. This initial offer will be followed by formal listings on the Dar es Salaam Stock Exchange and the London Stock Exchange.
CRDB said the proceeds will be spent on sponsoring environment-friendly projects to mitigate against climate change in sectors such as infrastructure, renewable energy, manufacturing, construction and water supply.
A green bond is a fixed income debt instrument used by institutions to raise sufficient funding for investment in sustainability projects that are environmentally friendly while at the same time generating substantial profits for the investors.
Other African countries that have issued green bonds in recent years include South Africa, Ghana, Nigeria and Kenya.
CRDB Managing Director Abdulmajid Nsekela said the Kijani Bond would be accessible to “even the average Tanzanian with a minimum initial investment of Tsh500,000 ($208).
According to the bank’s board chairman Dr Ally Laay, the bond would be equally available to both local and international investors in Tanzanian shillings or US dollars.
The Kijani Bond has been endorsed by Tanzania’s Capital Markets and Securities Authority, whose chief executive Nicodemus Mkama said it was expected to go a long way towards further developing green financing in Tanzania.
The International Finance Corporation signaled its support with a pledge to provide 40 percent of the total $300 million requirement for the bond issuance.
Evans Osano, director of capital markets, described its launch as “a major moment for the sustainable finance agenda in Africa as a whole.”
Aside from Financial Sector Deepening Africa, which is providing technical assistance towards the bond issuance, other key players are Stanbic Bank as lead arranger/underwriter and placing agent, Dentons EALC East African Law Chambers as legal adviser, Orbit Securities Company as sponsoring broker, and KPMG as reporting accountant.