Partner Organization: Lions Head Global Partners

Feasibility study for development of a green bonds market in Ghana

Following a webinar we held on 23 February 2021, where together with Lion’s Head Group Partners educated participants on Green Bonds and shared key insights from this scoping study on the feasibility of a Green Bond Market in Ghana.

In this study, we describe what a green bond is, the benefits they offer to issuers and borrowers and the barriers in issuing them. We review the current state of the Debt Capital Market in Ghana and the active issuances, both sovereign and corporate. We then assess the state of development of Green Finance in Ghana, the viability of using the DCM to support sustainable development and highlight how green bonds could be used to achieve the country’s Nationally Determined Contributions.

We also benchmarked Ghana against other Sub-Saharan African (SSA) countries with active green bond markets to identify key market development actions. In our analysis of the potential for green bonds in Ghana, we provide key stakeholder takeaways from interviews held as part of the stakeholder engagement, which formed the basis of our data for the report in addition to information gathered through desk research.

Finally, we provide an analysis of key takeaways – including key hurdles to be addressed, recommend actionable initiatives that could be implemented to drive the green bond market in Ghana – and a short and medium-term potential pipeline derived from conversations with local stakeholders.

Through this collaboration, we hope to build thought leadership for FSD Africa in Ghana.

Viability of gender bonds in sub-Saharan Africa

A landscape analysis and feasibility assessment

Gender bonds are broadly defined as bonds that support the advancement, empowerment and equality of women, though no official definition exists. Like other themed bonds, they can be issued as senior unsecured notes referencing the balance sheet of the issuer, but where proceeds are ring-fenced for specific use on eligible ‘gender’ activities, or as securitisations referencing a pool of assets directly.

The state of the market

There are currently no dedicated guidance principles on how to issue a gender bond, nor any specific eligibility criteria for use of proceeds. Most bonds issued with a gender label have so far relied on the ICMA’s Social Bond Principles, the UN’s Sustainable Development Goals or the UN Women’s Empowerment Principles as reference standards.

As of March 2020, 13 gender-labelled bonds have been issued by a variety of entities, ranging from large commercial banks to NGOs, to multilateral development banks. These can be grouped into three categories:

The majority of gender bonds issued so far address financial inclusion of women and female entrepreneurship in emerging markets or access to leadership positions and gender-positive
corporate policies in developed markets. Missing from the market are companies that provide goods and services which disproportionately benefit women or bonds which look at women in the issuer’s supply chain.

Reporting on the impact of gender bonds also needs further attention. For financial inclusion bonds, few bonds go beyond the ‘loans disbursed’ metric to look at the impact they have on women’s lives. Similarly, for corporate behaviour bonds, it is not always clear whether the companies being lent to are required to improve on their current performance, and if so, how and at what rate.

By making it easy for both investors and issuers to understand what a gender bond is, the potential for market growth increases significantly.

While there is some interest in gender lens investing, no gender bond has yet been issued in sub-Saharan Africa. In our assessment, we focused on the countries with the most developed capital markets and most likely chance of success in the short and medium-term: Nigeria, Kenya and South Africa.

We concluded that issuance in a local market will not be straightforward outside of South Africa, due to mismatched expectations and relatively conservative investors: