Country: Tanzania

SADC green finance demand study

Africa is under pressure to develop its green finance market for two crucial reasons. The first is to significantly and sustainably respond to climate change, as the continent is vulnerable to the severe effects of climate change. Secondly, African private and public sectors lag behind other emerging markets in green (and sustainability) bond issuances. The SADC Green Bond Programme serves to address the aforementioned challenges in general, and in particular, the embryonic status of the green finance market in the SADC region.

Since its official launch in March 2021, the Programme has made commendable headway in implementing its core strategic objective of developing the green bond market in SADC – which is demonstrated by the publishing of this SADC Green Finance Demand Study. Considering that the development of the capital market ecosystem depends on timely empirical information, the importance of this study cannot be overstated. Not only does it bridge the existing knowledge gap regarding green investmt opportunities and barriers in the SADC region, but it is also underpinned by one of CoSSE’s mandates, which is to encourage the transfer of securities markets’ intellectual capital and technical expertise among member Exchanges of CoSSE.

Exploring new frontiers in fintech investments in East Africa 2018

FSD Africa in partnership with East Africa Venture Capital Association (EAVCA), Intellecap and FMO have published the findings of their sector study on the investment opportunities in FinTechs within East Africa.

The report’s core explores the funding options currently available for the sector: ranging from debt offering, grants and equity provision. With the increased success of FinTech players in East Africa, investors are keen to understand the opportunities available for capital deployment in East Africa’s FinTech space. The report assesses the financing options currently available in the market for target investors. It also explores the risks associated with the sector and how other investors deal with such risks. Finally, the report has explored returns available for FinTech investors in East Africa, to provide guidance on the region’s earnings potential.

Some highlights from the report:

  • Africa is the second fastest growing region for Fintech investments, with an 87% Compound Annual Growth Rate (CAGR), after Asia Pacific;
  • US$ 200 million was raised for Fintech businesses in East Africa in 2017;
  • 98% of funds raised in East Africa went to Kenyan companies;
  • Lending segment of Fintech sector attracted the highest number of funds raised between 2010 – 2017; and
  • Equity financing accounted for 71% of total funds raised; debt financing 6% and hybrid financing 23%.

EIT Climate-KIC Tanzania Early Stage Climate Adaptation Venture Landscape Final Report

The Tanzania Early-Stage Climate Adaptation Venture Landscape Report, conducted by FSD Africa and EIT Climate-KIC, offers a comprehensive analysis of the financing ecosystem for climate adaptation initiatives in Tanzania. The report highlights the nascent but growing startup ecosystem, underscoring the challenges faced by early-stage ventures, such as limited access to tailored financing options and a lack of investment readiness. It also identifies agriculture and energy as the dominant sectors, with innovative startups addressing climate challenges through AI, digital marketplaces, and sustainable technologies. However, bureaucratic inefficiencies and stringent financial regulations remain key barriers to scaling these ventures.

To foster a thriving ecosystem, the report outlines strategic interventions, including the expansion of incubators, enhanced investment readiness programmes, and the promotion of flexible debt financing solutions. It emphasises the importance of fostering stronger linkages between businesses, investors, and accelerators, while advocating for policy reforms to create a more conducive environment for climate adaptation initiatives. This roadmap aims to build a robust pipeline of investable businesses and attract diverse funding sources to scale impactful solutions for climate resilience in Tanzania.

Local currency solution for Multilateral Development Bank Portfolio Transfer: Feasibility Study

In June 2023, FSD Africa was awarded funding from the MDB Challenge Fund to develop a project focused on a ‘Local Currency Solution for Multilateral Development Bank (MDB) Portfolio Transfer’ (the project). FSD Africa’s proposed solution aims to empower MDBs and Development Finance Institutions (DFIs) to provide more financing to developing and emerging economies. This is aligned with the recommendations of the G20 Independent Review of MDBs’ Capital Adequacy Framework (CAF) report. The focus area is on promoting financial innovation and development of new instruments to catalyse private investment.

The purpose of this study is to explore the potential for transferring asset portfolios funded by multilateral development banks (MDBs) to domestic institutional investors in Africa through a local currency solution.

The primary aim is to expand the scope of MDBs’ investments by freeing up capital while benefiting local institutional investors and capital market development and reducing the foreign exchange risk of those benefiting from the investments funded by MDBs.

The study focuses on markets in East and West Africa with relatively deep institutional investor bases, including Kenya, Tanzania, Uganda, Ghana, Nigeria, Cote d’Ivoire, and Senegal.

Technical Assistance Grant Signing Ceremony with Dhamana Guarantee Company

Posted on by Kihingu Inc

UK-KENYA PARTNERSHIP REACHES FURTHER MILESTONE FOR LONG-TERM CLIMATE FINACE SOLUTIONS IN KENYA

  • Investors back Dhamana Guarantee Company’s work to transform East Africa’s financial landscape.
  • Tackling climate change given another boost in Kenya as, for second time in a week, a UK-Government backed investor in green finance solutions puts pen to paper.

Monday 30 September 2024 – the Dhamana Guarantee Company Ltd (Dhamana) has reached a major milestone, marked at an event in Nairobi today.

Investors in the new company put pen to paper at a signing ceremony, which will allow the company to kick-start operations.

Dhamana aims to mobilise private sector finance to support the development of sustainable growth businesses. It will do so by issuing guarantees to commercially viable projects, businesses, and institutions that tackle the climate crisis and make progress towards the Sustainable Development Goals (SDGs).

The design and creation of the company was supported by the UK-Government backed investor the Private Infrastructure Development Group (PIDG) through InfraCo Africa.  With its anchor investment, PIDG kick-started Dhamana, attracting further investment from the African Development Bank (AfDB) and County Pension Fund Financial Services (CPF), with support provided by Cardano Development and FSD Africa.

The project will target businesses that add value to people’s lives, improving the day-to-day life of Kenyans. The increase in affordable finance for Kenyan businesses will mean projects will require less capital to get off the ground, make money, and generate growth. Dhamana will also enable investors to diversify their portfolios, acting as a catalyst to transform East Africa’s financing landscape.

This is the second time in a week that an investor in climate solutions backed by the UK Government has achieved a milestone. Last week, MOBILIST signed a partnership with the Nairobi Securities Exchange, which aims to drive the listing of new investment products in the Kenyan market and increase the amount of private sector capital available for development and climate projects in Kenya and drive growth.

Dhamana CEO, Christopher Olobo, said, “With the support of our investors and supporters, the Private Infrastructure Development Group (PIDG), Cardano Development, FSD Africa, CPF Financial Services, and the African Development Bank (AfDB), we have worked to develop Dhamana as an important catalyst for long-term sustainable finance in the region. Dhamana’s local currency guarantees will connect pools of untapped capital with East Africa’s real economy, making a tangible difference to people’s lives and offering local investors the opportunity to invest in Paris-aligned initiatives.” 

Speaking after the event, PIDG CEO, Philippe Valahu said, “Building on the success of other PIDG-supported credit enhancement facilities in Nigeria and Pakistan, Dhamana will demonstrate the value of such a facility in the East African market, opening up opportunities for investors and clients alike. Crucially, Dhamana will engage new partners and investors in our efforts to urgently address the climate crisis and accelerate delivery of the UN sustainable development goals.”

How capital markets can enable gendered socio-economic progress

Posted on by Kihingu Inc

Imagine a world where millions of ingenious women in Africa have the resources to turn their ideas into thriving businesses. That is the future FSD Africa is working towards, and capital markets are the key. This isn’t boring financial jargon. We are talking about unlocking the potential of entire communities.

Before the Covid-19 pandemic, women-owned businesses in sub-Saharan Africa faced a staggering funding gap of $42 billion while the total financing needs for 128 developing countries was a staggering $5.2 trillion[1]. Though these numbers might have shifted slightly in the past four years, the challenges posed by post-pandemic economic recovery likely have not made things easier. Women are disproportionately affected by issues like lack of clean water and access to clean cooking solutions. Hours spent fetching water or gathering fuel are hours lost for education, work and family. Women make up nearly 70% of the workforce in agriculture yet receive only 7% of investments.

But here’s the good news: things are changing. On the 19th of February 2024, FSD Africa launched a game-changer – the Africa Gender Bonds toolkit – which is not just a resource, but a cheat sheet for unlocking the power of capital markets to support women in Africa. This is just one way that FSD Africa is playing its part in strengthening sustainable financial markets as a key tool to reduce barriers facing women in Africa, particularly women in business.

We have seen many efforts in trying to solve for gender inclusion, particularly inclusion of women in the finance sector. While much is being done as to how to tailor financial products to attract women more as a customer segment; there is less effort when it comes to thinking about investor incentives. How do we unlock more financing from investors to flow to women businesses? Which incentives need to be in place to mobilise and catalyse more gender responsive financing from capital markets in Africa? This is a key piece of the puzzle that we are committed to helping solve. We believe that leveraging capital markets in capital mobilisation for gender offers us a blank slate where creativity and innovation can flourish in integrating gender metrics and considerations into the design of capital mobilisation vehicles.

Real stories, real impact

In the past half a decade, like-minded institutions, have significantly increased their efforts to anchor investments in gender-intentional capital mobilisation vehicles such as gender bond issuances that tap into investor incentives. These partnerships have sparked remarkable catalytic and demonstrative change. Take, for instance, our support to NMB Bank Plc in issuing the Jasiri Bond, Sub-Saharan Africa’s first publicly listed gender bond. According to the first Jasiri Bond impact report, the response was overwhelming—it was oversubscribed by a staggering 197%, drawing in 1,630 investors, 99% of whom were individuals. Here’s the best part: 97% of the loans went to women! That’s thousands of women empowered to chase their dreams and build a brighter future for themselves and their families. Such partnerships exemplify the power of collaboration in driving tangible impact and advancing gender equality in finance.

And it’s not just about businesses. Bonds issued in sectors with high female participation can also strengthen capital mobilisation for gender benefits. For example, UNICEF estimates that women and girls globally spend 200 million hours per day fetching water for household consumption. In Sub-Saharan Africa, a single trip to collect water takes an average of 33 minutes in rural areas and 25 minutes in urban areas. This takes time away from productive economic activities, education, and leisure, and increases exposure to gender-based violence. In the energy sector, the Clean Cooking Alliance estimates that women and girls spend up to 5 hours per day gathering fuel or spend a significant portion of household income to buy it. Imagine if we used capital markets to issue water bonds to improve water infrastructure, or clean cooking bonds to finance cleaner energy solutions. The impact of women’s lives would be transformative.

Building the bridge together

In this regard, we have continued to support our partners in bringing innovative financial tools to market to mobilise gender-responsive finance. For instance, in 2021, we supported Banque Central Populaire in Morocco issue the first gender bond in Morocco, raising about US$ 20.4 million to provide 17,080 microcredit loans to economically disadvantaged urban and rural women.  We also provided technical assistance for a US$ 10million green bond issuance by Burn Manufacturing to support clean cooking in Sub-Saharan Africa. Most recently in 2024, we supported the Tanga Urban Water Supply and Sanitation Authority in Tanzania in the first ever water green bond in Africa, aimed at improving sustainable water supply and environmental conservation within Tanga city and nearby townships. To support more of these issuances FSD Africa in collaboration with UN Women, BII, and FSD Network designed the gender bonds toolkit to equip both issuers and investors with the tools they need to make gender-responsive finance a reality.

As we champion for more incentives and instruments to mobilise gender-responsive finance through capital markets, we recognise that proper impact measurement and management are crucial for understanding the outcomes and impact of gender-responsive finance through capital markets, requiring accurate data collection and performance insights. Globally, we see that gender-disaggregated data is sparse and weak; thus, these issuances present an opportunity to strengthen the collection and management of gender-disaggregated data. As a guide, issuers and investors can look to the gender bonds toolkit outlines considerations and use-case examples to demystify the post-issuance reporting stage.

At FSD Africa, we are championing for capital markets as an enabler of gender-responsive finance. By sharing our experiences, insights and best practices with issuers and investors, we can significantly boost gender-focused capital for African businesses.

[1] https://www.ifc.org/content/dam/ifc/doc/mgrt/2020-12-call-for-insights-e-publication.pdf

[2] Gender refers to the socially constructed roles, behaviours, and expectations that societies assign to individuals based on their perceived sex.  Gender disaggregated data separates information based on these societal roles and expectations. It goes a step further to explore the ‘why’.

 

Why African capital markets need an unshakeable foundation

Posted on by Kihingu Inc

Ever wondered what policemen, electoral commissions, regulatory bodies and parents have in common? You guessed it, they enforce norms in the spheres of their influence, a crucial role I deeply respect from my almost nine years as a staff member at a financial sector regulator.  I will explain why.

Regulation is an art, not a science

Enforcing norms and legal rules in any sector is about striking the perfect balance. Overregulation can stifle innovation, while insufficient regulation can encourage malpractice.  My previous experience at the Capital Markets Authority, Kenya involved gatekeeping roles similar to those of an immigration officer, ensuring only qualified participants entered the market. I was also involved in the development process for various pieces of capital market and broader financial sector legislation.  This practice highlighted the artful nature of regulation – balancing enforcement with facilitation to foster market integrity and trust.

Challenges in African markets

Unlike developed markets, capital market regulators in Africa have the dual mandate of regulation and development. Developing these markets requires specialised skills and significant resources in human, financial and IT capacities.  This is something that regulators understand very well – and it falls on all African governments and policymakers to appreciate this as well.  Reason being, capital markets are built on trust – market players must have confidence in the way the market is run, giving credence to how it operates.  Effective market regulation hinges on the ability to detect and respond swiftly to fraud and misconduct.  It requires strong regulatory frameworks and the right tools.  Specialised skills are also required.  These cost a lot but are necessary for market confidence and functionality.

The benefits of well-regulated markets

When markets are well run, everyone benefits, from issuers seeking capital to investors looking for returns. Where markets function optimally, they mobilise long-term capital in local currency to power the real economy.  For example, enabling a water company to raise USD 20m for water infrastructure maintenance and water conservation efforts in Tanzania or mobilising USD 95m to finance a green mobility project in Morocco. This showcases successful capital mobilisation for significant projects and the immense opportunity to replicate it.

The broader context

While regulation is important, it is not the sole factor. A stable political environment and conducive macroeconomic conditions contribute to a thriving capital market.  I believe that African governments’ appreciation for not only the macro-level issues but also the opportunities for supporting capital market growth is always needed.  By aligning government policies and incentives, like tax neutrality for specific securities and exemptions for green bonds enables more efficient capital-raising efforts by the private sector and encourages innovative financing solutions.

I believe African governments realise that reliance on public financing through external debt borrowing in hard currency is not an infinite pot.  As of 2022, external debt in sub-Saharan Africa stood at USD 833 billion and this rises and falls depending on currency volatility.  This type of financing is not sustainable, and it will not meet all the continent’s development needs. Alternative financing options include using capital markets or a mix of different types of capital and risk mitigation instruments like guarantees, insurance, and currency hedging mechanisms.   This is the time to deploy this creative mix of financing solutions to fund sustainable development.

The role of FSD Africa

But back to my main point – capital market regulation and development are not a walk in the park.  At FSD Africa, we have implemented several regulatory support initiatives – helping regulators strengthen their institutional capacity and build robust regulatory frameworks and long-term capital market development plans.

In March 2024, our efforts in supporting development of the capital market intermediaries licensing and monitoring legislation assisted the Ethiopian Capital Markets Authority in granting a license to its first investment advisor.  This is a foundational step in the establishment of the capital market and mobilisation of capital.  In addition, our work with various regulators and exchanges to design rules for sustainable bond issuances has promoted capital raising of approximately USD 1.2 billion across the continent.  Such initiatives demonstrate the potential of regulated markets to mobilise sustainable finance and support Africa’s development.

An all-hands-on-deck approach is needed from the government and other market facilitators to support regulators in fulfilling their mandates.  And these dual mandates were made for this time in history – for this time in the continent’s sustainable growth trajectory.  I am sure as we support the implementation of regulators’ statutory mandates which the drafters of capital market legislation envisioned, our economies will be better for it.

First East African sustainability bond lists on the London Stock Exchange

Posted on by Kihingu Inc

Original article by the impact investor

The NMB Jamii Bond, Tanzanian NMB Bank’s inaugural sustainability bond, has cross-listed on the London Stock Exchange to drive institutional capital into the country’s climate finance and development projects.

NMB Bank, a commercial bank in Tanzania, has announced the cross listing of its inaugural sustainability bond, the NMB Jamii Bond, on the London Stock Exchange.

The NMB Jamii Bond launched in both Tanzanian shillings and US dollars on the Dar es Salaam Stock Exchange in December last year, with anchor investments from development finance institutions British International Investment (BII) and the International Finance Corporation (IFC). It aims to increase investment into Tanzanian climate finance and development projects.

The dual-tranche bond raised a total of TZS 400bn (€142m) from both local and international investors in its initial offering, but it is the US dollar tranche that listed on the London stock market.

Ruth Zaipuna, chief executive of NMB, said: “Today’s listing of the Jamii Bond cements NMB Bank’s position as a trailblazer in sustainability within the African capital markets, and we are humbled that our commitment to ESG principles has garnered national and international recognition.

“This extraordinary success highlights the strong confidence Tanzanian and global investors have in NMB Bank’s soundness and commitment to sustainability across operations, business, community, and environment. It reaffirms our creditworthiness and reflects the desire of investors, both local and international, to seize the safe and impactful investment opportunities within Tanzania’s robust investment climate.”

BII, which as anchor investor committed €13.8m equivalent in Tanzanian shilling to the bond, confirmed it had no immediate plans to invest in the dollar tranche through the LSE.

Technical assistance

FSD Africa, a specialist development agency dedicated to mobilising sustainable financing for projects on the African continent, provided technical assistance for NMB Bank’s portfolio review, which was assessed by the not-for-profit organisation Climate Bonds Initiative (CBI), to ensure the bond’s alignment with various international organisations and their requirements and taxonomies.

Responding to questions from Impact Investor, Mark Napier, chief executive of FSD Africa, explained that the portfolio review was critical to identifying existing and pipeline green projects that an issuer could fund.

“A portfolio review assesses the nature of the projects to ensure that they align with the eligibility criteria for green projects.  It also enables an issuer to identify the funds required to meet the financing need for this portfolio,” he said.

FSD Africa also offered technical assistance towards securing Second Party Opinion (SPO) for NMB Bank’s sustainable finance framework, a document which explains to investors which eligible projects will be funded, how these projects are selected, how often impact will be reported and how the funds raised will be managed.

“A second party opinion is a required step under the International Capital Market Association  (ICMA) sustainability bond principles that assesses the bond framework. Investors rely on this second party opinion, undertaken by a third party, to make an informed decision as to whether to invest in a sustainable bond or not,” Napier explained.

Meeting Africa’s climate goals

Earlier this year, a UN economist predicted Africa would be $2.5trn short of the finance it needs to cope with climate change by 2030 despite, as a continent, contributing the least to greenhouse gas emissions.

Another estimate puts Africa’s climate finance needs at $277bn (€255bn) annually in order to meet its Nationally Determined Contributions, the climate action plans which detail countries’ commitments to achieving the global targets of the Paris Agreement.

The NMB listing is expected to contribute to plugging this gap, but private sector financing still has a long way to go with the 2022 Landscape of Climate Finance in Africa report, commissioned by FSD Africa and others,  revealing that it represented only 14% of all of Africa’s climate finance from 2019 to 2020, much lower than in other regions like South Asia (37%), East Asia and Pacific (39%), and Latin America & Caribbean (49%).

Napier said that during the period the report was undertaken, a key finding was that actual risk, perceived risk, and ticket sizes dissuaded private capital players, and that recommendations were made to address this.

“For instance, development partners could target higher leverage ratios through blended financing structures, with a particular focus on an enhanced role for private insurance and partial guarantees. They could also support capacity building both within domestic finance institutions and in developing a pipeline of investable opportunities.”

Information exchange platforms

He added that information exchange platforms and financial alliances such as the Glasgow Financial Alliance for Net Zero (GFANZ), a group of financial institutions formed during the COP26 climate conference in Glasgow, also had a role to play.

“Information exchange platforms could make existing transactions more visible to investors. International networks like GFANZ could support pipeline development and back transaction accelerators. They could also engage actively with domestic institutions to source and bundle viable, well-diligenced transactions,” he added.

The successful issuance of the dual-tranche Jamii Bonds on the Dar es Salaam Stock Exchange last year was said to highlight the growing capacity of local investors to meet the rising demand for climate and sustainability financing.

 

Tanga UWASA’s Water Green Bond oversubscribed, officially listed on DSE

Posted on by Kihingu Inc

Tanga UWASA’s Water Infrastructure Green Bond, the first ever Sub-national bond to be issued in East Africa, has been oversubscribed by 103%. The green bond, worth TZS 53.12 billion, and launched on 22nd February 2024, was successfully listed at the Dar es Salaam Stock Exchange (DSE) on 15th May 2024. It performed impressively with 65% of collection being from local investors while attracting 35% of foreign investors. This is a clear indication of the growing interest in sustainable investment and confidence of international investors to the Tanzania market.

The Tanga UWASA bond will now be traded at the DSE, and funds raised will propel sustainable water supply infrastructure and environmental conservation efforts in Tanga. Listing of the Tanga UWASA bond signifies a successful demonstration that the existing regulations and frameworks can be used by municipalities, cities, and sub-national entities to raise significant capital from domestic markets, in local currency to finance development, and in turn reduce pressure on Government budget.

On his address, the guest of honor, Hon. Dr. Mwigulu L. Nchemba, Minister of Finance, said

“this event and similar events by Corporates in the recent past, is a clear testimony that the Alternative Project Financing Strategy (APF) launched by the Government in May 2021 is doable not only to corporates, but also to Government institutions. And considering that the fully amount required for project implementation is now available, the Ministry of Finance will keep on following up to ensure that this project is successfully implemented as planned.”

Hon. Jumaa Aweso, the Minister for Water highlighted that,

“financing needs for water infrastructure across the nation is still very high. Competing government priorities, and limited budget, results in delay of projects implementation. Bond issuance such as this one, complements government efforts and expedite provision of water services to the citizens. I urge other water utilities to learn from the Tanga UWASA bond and commence replication in their localities”.

On his key remarks, the Head of United Nations Capital Development Fund (UNCDF) in Tanzania Mr. Peter Malika congratulated the government for achieving this historic milestone. He added

“In collaboration with the government, our significance and support as a development finance institution has resulted in clearing and clarifying technical and policy hurdles that existed before this transaction, so that future transactions can use Tanga UWASA’s bond as a national template, fit for replication and taking to scale to other sectors such as energy, agriculture, health, education, income generation and productive sectors. I want to recognize the National Municipal Bond Taskforce, with this team we have built and entrenched a lasting crosscutting national capacities that ought to be emulated as a winning formula in other initiatives”.

From the regulator perspective, Mr. Nicodemus Mkama, Chief Executive of the Tanzania Capital Market and Securities Authority (CMSA) highlighted that,

“Successful issuance and listing of Tanga Water Bond on the Dar Es Salaam Stock Exchange, solidifies the position of Tanzanian capital markets on the map of global capital markets that offer innovative and sustainable financing products attracting both domestic and international investors. He further urged other subnational institutions and municipalities to emulate the path taken by Tanga UWASA, in financing revenue-generating projects through capital markets.”

In addition, “The listing of the TANGA UWASA bond demonstrates the power of collaboration between the public and private sectors, as well as the commitment of stakeholders to make investments that generate financial returns and positive impacts on society and the environment. Therefore, DSE invites public institutions, companies, and the private sector to continue this path of raising capital aimed at promoting and building a competitive economy for the development of people” said Ms. Mary Mniwasa, the Chief Executive Officer of DSE.

On his side, the Managing Director of Tanga UWASA, Eng. Geofrey Hilly, expressed immense pride and honor in witnessing the successful listing of the Tanga Water Bond. He emphasised its significance in advancing sustainable water infrastructure and environmental conservation, extending gratitude to investors, partners, and stakeholders for their unwavering support and trust. He assured the investors,

“as the pilot, we are determined to maintain a strong and unwavering commitment to our investors and the government, on professionalism, proper use of funds, honoring our obligations, and delivering quality water services to our customers”.

Other stakeholders involved in preparations of the Tanga water green bond includes NBC Bank (lead transaction advisor), FSD Africa (supported green framework), FIMCO and Global Sovereign Advisory (financial & investment advisory), ALN Tanzania (legal advisor), Innovex (reporting accountant), Vertex International Securities (stockbroker) and ISS Corporate Solutions (second-party opinion provider).

Tanga UWASA issues East Africa’s first ever Water Green Bond

Posted on by TIMOTHYRADIER

Embargoes until 22nd February 2024, afternoon.

 Tanga

Today, the first ever Sub-national Water Infrastructure Green Bond in East Africa, worth TZS 53.12 billion has been issued by Tanga Urban Water Supply and Sanitation Authority (Tanga UWASA), an autonomous water utility. This landmark transaction would fund the expansion and improvement of sustainable water supply infrastructure and environmental conservation within Tanga city and nearby townships. The 10-yrs project revenue bond to be listed at Dar es Salaam Stock Exchange (DSE), offers an attractive interest rate of 13.5% per annum to be paid semiannually.

The government of Tanzania adopted the Alternative Project Financing (APF) strategy in 2021 because of the need to broaden its domestic revenue base to finance various national development initiatives including water, energy, heath care, agriculture, and other productive infrastructure projects. Tanga bond is the first significant transaction to demonstrate that the existing regulations and frameworks can be used by municipalities, cities, and sub-national entities to raise significant capital from domestic capital markets in local currency to finance development. Innovative financing such as this one can help to bridge the gap between what is available and what the government, need to reach national development plans and sustainable development goals”.

In his speech while gracing the launching ceremony, the guest of honor H.E. Philip Mpango, Vice president of United Republic of Tanzania said that financing of strategic revenue generating projects through a revenue bond such as the Tanga Bond will reduce pressure on government budget and provide an opportunity to focus on priority social initiatives that can’t be financed via commercial windows. On that front, he said , “Am directing the Treasury Registrar’s Office which supervises public institutions and the Minister of State, President Office, Regional Administration and Local Government (PORALG), to explore eligible public institutions, Local Governments, cities and municipalities to prepare to tap long term finance  via revenue and municipal bond issuance.”

Speaking during the event, the Deputy Minister of Finance Hon. Hamad Chande highlighted that, the Government of Tanzania is committed to ensure that its Alternative Project Financing strategy is used by more public entities to finance local development instead of relying only on government grants, a leaf to be borrowed from the Private Sector and Corporates who operates in the same market.

On his side, Hon. Jumaa Aweso, the Minister for Water insisted that the direction of the 6th administration and the CCM Manifesto is to ensure access to water supply by 95% in urban areas and 85% in rural areas by December 2025. To date, water accessibility has reached 88% and 77% in urban and rural areas respectively. “In order to achieve these targets, it is crucial to deploy various innovative financing mechanisms similar to what Tanga UWASA has done. This project is expected to improve and increase water supply from 96% to 100% in Tanga City and reliability of water for 24 hours, by June 2025. Similarly, increase water supply network from 70% to more than 95% in the townships of Muheza and Pangani respectively by June 2025. Likewise, increase capacity to supply adequate water to Mkinga District through the ongoing project which is under construction”. He added.

On his key remarks, the Head of United Nations Capital Development Fund (UNCDF) in Tanzania Mr. Peter Malika congratulated the government for achieving this historic milestone. He said “UNCDF played an important role of partnering with the government and its key national institutions to influence policies and improve the enabling environment related to domestic capital markets development. Tanga Bond is a demonstration that capital markets are a viable option for financing national development needs without increasing the national debt limits”. UNCDF will continue to provide technical assistance and financial assistance to ensure more sub-national and municipal bond issuances take place to meet the growing demand to fund public services driven by growing populations, urbanization and climate change.

Mr. Nicodemus Mkama, Chief Executive of the Tanzania Capital Market and Securities Authority (CMSA) highlighted that “CMSA has been at the fore in steering development of innovative sustainable capital market products that have facilitated successful issuance of the first gender and multi-currency green bonds in Sub-Saharan Africa; as well as shariah compliant sukuk bonds. These results have positioned Tanzania on the map of global capital markets that offer innovative and sustainable products attracting both domestic and international investors. The Tanga UWASA bond, which is an innovative, sustainable blended capital market product with elements of subnational, water infrastructure, green, revenue bond is a milestone pathfinder transaction, expected to showcase other subnational institutions and municipalities in financing revenue generating projects, through capital markets.”

Other stakeholders involved in preparations of the Tanga water green bond includes NBC Bank (lead transaction advisor), FSD Africa (supported green framework), FIMCO and Global Sovereign Advisory (financial & investment advisory), ALN Tanzania (legal advisor), Innovex (reporting accountant), Vertex International Securities (stockbroker) and ISS Corporate Solutions (second-party opinion provider).

General public, investors, Institutions and individuals are welcome to visit any NBC Bank branches or any other authorized brokers to invest in the Tanga water green bond, within the offer period of 6 weeks.

END