Pillar: Financial Markets

TDB Group and FSD Africa Collaborate on Project Preparation Facility for Climate Action Projects in Africa

Posted on by TIMOTHYRADIER

The Eastern and Southern African Trade and Development Bank Group (TDB Group) and Financial Sector Deepening Africa (FSD Africa), are pleased to announce a new partnership on the sidelines of COP28 to accelerate the implementation of climate action projects across the continent.

In 2022, TDB launched Class C Green + shares, an innovative equity instrument that provides a pathway for institutional investors to contribute to climate action and SDGs with risk capital, leveraging each dollar invested four times into qualifying projects and transactions.

However, the challenge of lack of bankable green projects persists. To address the latter, TDB Group has set-up a project preparation facility for climate action projects which FSD Africa will strengthen through technical assistance support under this agreement. More specifically, FSD Africa will support the Group through expert services to expand its lending pipeline in line with its Climate Finance Strategy and Green Taxonomy, enable aligned projects to reach financial closure, as well as to continue mobilizing new climate-themed capital to deploy.

Expanding the pipeline of green projects is indeed a priority for TDB Group to meet its commitments in supporting its member states to address climate mitigation and adaptation needs, as well as to create additional opportunities for further investments in Class C Green + shares and deploy available climate-themed funding.

Mary Kamari, TDB Group Corporate Affairs and Investor Relations Executive said, “TDB Group has been positioning itself to accelerate the financing of climate action through its Trade and Development Fund (TDF), where a project preparation facility was set-up. We are pleased to enter into this agreement with a likeminded partner like FSD Africa which will extend valuable capacity support towards our vision to advance climate action in the region.”

Mark Napier, the CEO of FSD Africa said, “Multilateral Development Banks are an important part of the financing ecosystem in Africa. Our partnership with TDB Group will increase project pipeline opportunities, and avail innovative financing instruments and structures to attract institutional capital for Africa’s sustainable development priorities. We are pleased that two African institutions are collaborating on solutions for Africa’s climate financing gap.”

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Pension funds have the potential to ignite Africa’s infrastructure revolution

Posted on by Kihingu Inc

Across Africa, economic growth and development have gained significant momentum in recent years. But with growth comes a challenge: building and funding the infrastructure to support it.

Where will the funding for Africa’s new infrastructure come from? This remains a crucial question. One solution that offers great potential is pension funds: a vast pool of long-term capital that could be channelled towards infrastructure, with a focus on climate change adaptation.

The importance of infrastructure

Infrastructure is the backbone of any thriving society, enabling connectivity and access to services. In Africa, better infrastructure is pivotal to progress – building bridges that connect communities, power plants that illuminate cities, schools that nurture young minds and hospitals that save lives. But the scale of infrastructure development required across the continent is substantial. And this means a significant amount of funding is needed.

Harnessing pension funds

African pension funds have grown rapidly in recent years, accumulating substantial capital. Instead of letting this money sit idle, pension funds could invest a portion of it in infrastructure projects.

With their long-term outlook and stable cash flows, pension funds are well suited for investing in projects that require longer periods of time and large amounts of resources – as many infrastructure projects do.

Win-win scenario

When pension funds invest in infrastructure, it creates a win-win situation. Infrastructure investment entails improved transport, better energy access and upgraded healthcare facilities, which all contribute to economic growth and enhanced quality of life for people in the region.

In addition, infrastructure projects generate long-term revenue streams, like toll fees from highways or electricity sales from power plants, providing pension funds with steady cash flows, and supporting future retirement payments.

Nigeria and South Africa

 Several African countries have already begun to recognise the value of investing pension fund assets in infrastructure:

  • Nigeria: The Nigerian Sovereign Investment Authority has used pension assets to finance key infrastructure projects, including roads, power generation and healthcare facilities. These investments have greatly improved connectivity and quality of life for many Nigerians.
  • South Africa: The Public Investment Corporation has been vital in financing infrastructure projects, including renewable energy initiatives. These investments are contributing to South Africa’s sustainability goals and fostering a greener future.

Covid recovery and sustainable investment

 The Covid-19 pandemic has severely impacted Africa’s economy, but the recovery effort has provided an opportunity to prioritise sustainable infrastructure investments. By allocating a portion of their portfolios to infrastructure projects, pension funds can help drive economic recovery while ensuring long-term returns. In Ghana, for example, the Social Security and National Insurance Trust has been actively investing in infrastructure projects to support the country’s recovery efforts.

Climate change resilience

Africa is particularly vulnerable to the effects of climate change. This is an important consideration when financing new infrastructure. Pension funds can help the continent build a climate-resilient future by prioritising investments in renewable energy, climate-smart agriculture and resilient urban planning. In Kenya, for example, the government has invested in a number of renewable energy projects, like geothermal power plants. This not only helps to fight climate change, but also provides sustainable energy solutions for the country.

Building a sustainable future

African governments, supported by international organisations like the World Bank and the African Development Bank (AfDB), have already implemented recovery plans that emphasise infrastructure as a key strategy to stimulate growth and improve the lives of ordinary Africans. Continuing this momentum and recognising the potential of pension funds to finance infrastructure, will be essential for Africa’s financial development.

As African nations continue to grow and evolve, the deployment of pension funds in infrastructure projects stands as a beacon of sustainable development. These investments will do more than build roads, power plants, and hospitals; they will weave a fabric of connectivity, opportunity, and stability that will endure for centuries.

Mauritius Commercial Bank (MCB) Capital Markets advises EnVolt on its inaugural Green Project Bond issue

Posted on by TIMOTHYRADIER

MCB Capital Markets, the Investment Banking, Asset Management and Principal Investments arm of MCB Group (www.MCBGroup.com), has advised EnVolt on its inaugural issue of MUR 510m (USD 11 million) Green Project Bonds under its MUR 2 billion (USD 45 million) Multicurrency Green Bond programme.

EnVolt, the renewable energy development arm of ENL Group (“ENL”), a diversified investment holding company in Mauritius, is engaged in the construction of 13 solar roof and ground mounted facilities across the island with an aggregate capacity of 14 MWh and an estimated project cost of MUR 680 million (USD 15 million).

The issuance represents a major milestone for the Mauritian debt capital markets. It is the first time that a renewable energy project is financed by a bond issue. It is also the first Green Project Bond issued under the Green Bond Principles 2021 of the International Capital Market Association (ICMA). In line with the FSC Guidelines and international best practices, ENL’s Green Bond Framework was independently reviewed by Morningstar Sustainalytics. FSD Africa, the UK’s financial sector development organisation, provided technical support on the bond programme, as part of its wider Green Bonds programme.

The bond, which was rated by CARE Ratings Africa, raised fixed rate financing in Mauritian Rupees with a tenor of up to 17 years and attracted a broad investor base comprising banks, asset managers and pension funds. MCB Ltd was the largest investor in the bonds.

The project aligns seamlessly with and contributes to the Mauritian government’s ambition to achieve 60% renewable energy production by 2030. As the foremost banking group in Mauritius, MCB fully endorses this initiative, which endeavours to accelerate the country’s transition towards renewable energy. MCB is committed to supporting the transition to a circular and greener economy in line with Mauritius’ Nationally Determined Contribution (NDC), and to fostering local production.

Gilbert Espitalier-Noel, CEO ENL Group, said: “Our group positions itself as a major player in the renewable energy sector. Our initiatives align with the national strategy to produce up to 60% of Mauritius’ energy needs from renewable sources by 2030. Our green bond program will finance the expansion of our production capacity and enable us to contribute significantly to improve the country’s energy mix and energy security.”

Rony Lam, CEO MCB Capital Markets, said: “We are proud to have advised EnVolt on this landmark transaction, which sets international standards for the issuance of Green Project Bonds in Mauritius. This transaction reflects the rapid development of the local currency bond market over the past eight years. The deployment of local resources to finance the domestic economy and infrastructure projects is vital to the development of the African continent.”

Mark Napier, CEO FSD Africa, said: “FSD Africa is pleased to have supported everyone involved in this historic green bond issuance by EnVolt, which we hope sets a precedent for further such transactions not only in Mauritius but across the wider SADC region, building the strength of domestic African capital markets and, crucially, delivering financing routes for vital energy transition projects, which can accelerate Africa’s energy and climate security.”

Charlotte Pierre, UK High Commissioner to Mauritius, said: “International bond markets remain among the most effective and good value options for financing energy transition and major infrastructure investment programmes. We hope that many more African countries will follow the Mauritius example.”

Distributed by APO Group on behalf of The Mauritius Commercial Bank Ltd (MCB) Group.

About EnVolt:
EnVolt Limited is a subsidiary of ENL Group (“ENL”), a diversified investment holding company based in Mauritius. With over 100 subsidiaries and total assets totalling in excess of USD 2bn, the company has been a major player in the Mauritian economy since 1821. EnVolt Limited has a broad objective of developing and implementing ENL’s renewable energy initiatives. The Company, which has been operating since 2018, owns and operates 10 solar farms with a capacity of 4.1 MW under the Medium-Scale Distributed Generation 1 scheme of The Central Electricity Board of Mauritius.

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Money Does Grow on Trees

Posted on by TIMOTHYRADIER

In September 2023, Kenya held the first Africa Climate Summit, that brought together players from the private and public sectors from various African nations and engaging stakeholders from outside the continent. The Summit provided a platform for discussions around strategies that would mitigating and building resilience against climate change. Among other topics, adoption of innovative solutions such as agroforestry, as a mean to combat climate change and preserve our planet’s ecosystem, was discussed.

Despite being centuries old, agroforestry which aligns with modern sustainability development goal, has been gaining traction in the recent years. The fusion of agriculture and forestry holds the potential to unlock both environmental benefits and economic opportunities. Notably, it enables the trade of carbon credits, offering financial incentives to those who embrace sustainable land management and carbon sequestration through climate-smart agriculture.

Agroforestry presents a powerful solution for carbon sequestration, leveraging the natural capacity of trees as carbon sinks. Smallholder farmers can significantly reduce carbon footprints through offsetting emissions by integrating trees with crop cultivation hence practise smart climate agriculture. This transition offers them the potential for financial gain through participation in carbon trading, ultimately enhancing their livelihoods and benefiting local communities at large.

The adoption of agroforestry not only delivers environmental benefits but also fosters economic empowerment, achieved through incentivising sustainable practices, thus the small-holder farmers can benefit economically by adopting environmentally friendly techniques. Agroforestry empowers the farmers to diversify their income streams and reap the benefits of practising sustainable land management such as improvement of soil quality and curbing climate change while preserving the planet for future generations.

Additionally, local communities can harness the revenue generated from carbon sequestration projects. Community development in healthcare, education and infrastructure can be enhanced by reinvesting the income form the carbon sequestration projects. And so, The advantages of agroforestry extend beyond individual farmers and communities. Entire countries and the African continent as a whole stand to gain from cleaner air, healthier ecosystems, and increased environmental resilience.

To realize this potential, African governments, the private sector and non-governmental organizations should recognize the value of agroforestry and provide support to accelerate its adoption. Actions that encourage agroforestry and facilitate access to carbon markets can advance the growth of this transformative and innovative practice.

Promoting actions that encourage agroforestry and facilitate access to carbon markets can drive the growth of this transformative and innovative practice. Development organizations such as the African Development Bank, International Fund for Agricultural Development and Green Climate Fund are funding programmes that enable carbon sequestration in Africa. Their initiatives have over time supported restoration and conservation of the African biodiversity, soil, and water systems. These mechanisms have aided in powering the transformation of African landscapes into hubs of carbon sequestration.

Evidently, it is the achievement of the Acorn Agroforestry Carbon Programme by the Rabobank through its partnership with project coordinators including FSD Africa and cooperatives working directly with smallholder farmers in Africa, among other partners. Through the programme, the smallholder farmers particularly those in areas impacted by climate change, are enabled to transit to agroforestry.

The smallholder farmers are equipped to earn additional income through sequestering carbon from their carbon-capturing agroforestry; as the continent’s air gets cleaned up.

Therefore, agroforestry with its capacity to offset carbon emissions and improve the well-being of African communities, magnifies the synergy of environmental conservation and economic prosperity. It underscores the promise of sustainability as a pathway to a greener and more resilient future.

Beyond being a financial asset, carbon credits harvested from agroforestry projects serve as a testament to the harmonious coexistence of nature and humanity, representing an investment in a future where our planet becomes healthier from the choices we make today.

Africa, endowed with biodiversity and natural resource that offers an opportunity for environmental and economic transformation. Carbon. Carbon sequestration in Africa is not merely a dream but a tangible and innovative solution demonstrating that indeed that money does indeed grow on trees, which are our partners safeguarding the environment and securing our future. These trees are the lungs of our planet.

NMB Jasiri Gender Bond Report

Overview

This is the first Jasiri Gender Bond impact report from NMB Bank. NMB Bank is proud to be the first in Sub-Saharan Africa Region to issue a listed gender bond, setting a new norm for generating alternative financial instruments with long-term effects.

The NMB Bank Plc is a leading financial institution in Tanzania, with over 6 million customer accounts and over 3,500 staff as of December 2022. The Bank offers various retail, wholesale, and treasury customers an appealing spectrum of financial services and products.

The Gender Bond is part of the Bank’s women’s proposition, dubbed Jasiri, which means brave in Swahili, Tanzania’s predominant language. The Jasiri Bond backs the effort of women who combat
poverty in their families and communities but are the most under-served in Sub-Saharan Africa Region

Stove maker floats Sh1.5bn bond for Kenya, Nigeria upgrade

Posted on by TIMOTHYRADIER

Cooking stove manufacturer Burn has issued a $10 million (Sh1.5 billion) green bond whose proceeds will support clean energy projects in Kenya and Nigeria.

The company said the proceeds from the bond will allow it to increase its existing manufacturing capacity in Kenya as well as launch a new manufacturing facility in Lagos, Nigeria.

“Production will increase from the current 400,000 units per month to 600,000 units and will produce a range of life-saving biomass, electric, and LPG (liquefied petroleum gas) stoves,” it said in a statement.

The funds from the green bond are poised to extend these benefits to an extra two million households in the year 2024.

“Our decision to issue the first green bond to support clean cooking underscores our strong belief in the power of financial innovation to drive positive environmental and social change. Leveraging benefits such as investment communities’ interest in green financing and potential tax advantages to investors, green bonds have gained considerable traction in recent years. Burn is excited to deploy this innovative instrument to catalyse sustainable development” said Peter Scott, CEO and founder of Burn.

The US firm launched its first full manufacturing facility in Kenya in 2014. A brief on its website said that the solar-powered facility has a capacity of 250,000 stoves per month.

The bond issuance was supported by Dry Associated Limited, acting as the placement agent with FSD Africa, a specialist development agency funded by UK International Development, providing technical input on the bond framework and contributing technical assistance for the second-party opinion which was conducted by Agusto & Co., the leading Pan-African Credit rating agency and green bond verifier.

“We’re proud to have supported this landmark issuance, the first-ever green bond to finance clean cooking activities in sub-Saharan Africa. Biomass fuel is the main source of energy for cooking for the majority of households in Africa and the proceeds from this capital raise will support these households to transition to more sustainable alternatives” Evans Osano, director of Capital Markets, FSD Africa, said.

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World’s Largest Cookstove Manufacturer To Open Nigerian Plant After Record Green Bond

Posted on by TIMOTHYRADIER

BURN Manufacturing, the world’s leading clean cookstove manufacturer and distributor, plans to open a new plant in Nigeria’s economic capital, Lagos, after issuing Sub-Saharan Africa’s first-ever green bond.

The Kenyan firm said Friday that proceeds of the $10 million bond will also allow it to increase existing manufacturing capacity in its home country.

Production will increase from the current 400,000 units per month to 600,000 units and will produce a range of life-saving biomass, electric and LPG stoves.

“Our decision to issue the first green bond to support clean cooking underscores our strong belief in the power of financial innovation to drive positive environmental and social change,” Peter Scott, CEO and Founder of BURN, said.

“Leveraging benefits such as investment communities’ interest in green financing and potential tax advantages to investors, green bonds have gained considerable traction in recent years. BURN is excited to deploy this innovative instrument to catalyze sustainable development,” Scott said.

The bond issuance was supported by DRY Associated Limited acting as the Placement Agent.

FSD Africa, a specialist development agency funded by UK International Development, played a key role in providing technical input on the bond framework and contributing technical assistance for the second-party opinion which was conducted by Agusto & Co., the leading Pan-African Credit Rating Agency and Green Bond Verifier.

“We are proud to have supported this landmark issuance, the first-ever green bond to finance clean cooking activities in sub-Saharan Africa,” Evans Osano, Director, Capital Markets, FSD Africa, said.

“Biomass fuel is the main source of energy for cooking for the majority of households in Africa and the proceeds from this capital raise will support these households to transition to more sustainable alternatives,” Osano said.

“These are not only better for the environment but also have health benefits from the reduction of particulate and carbon monoxide emissions which particularly impact women given their greater exposure,” Osano added.

Sub-Saharan Africa urgently needs to mobilise $50 billion annually to address climate adaptation in agriculture, power and urban infrastructure, according to the UN Economic Commission for Africa and the International Monetary Fund (IMF).

Rising temperatures, sea levels, and worsening erratic rainfall are increasing the frequency and intensity of natural disasters and disrupting agricultural production, damaging infrastructure and threatening the sustainability of urban areas in the region.

The expected public financing available from national governments and international donors is however unlikely to be able to meet the financing needs of the region, underscoring the need to mobilise private capital.

A 2022 report by the International Energy Agency on the Africa Energy Outlook suggests that achieving universal access to clean cooking fuels and technologies by 2030 requires shifting 130 million people globally away from dirty cooking fuels each year.

The issuance of green bonds provides a crucial avenue for supporting this shift towards the adoption of cleaner cooking solutions for people.

BURN stoves have been independently verified by reputable institutions such as University of Pennsylvania, University of Chicago, as well as through a comprehensive impact assessment survey conducted by Yunus Social Business. The stoves have consistently been proven to provide substantial health, financial, and climate action benefits.

The funds from the Green Bond are poised to extend these benefits to an extra 2 million households in the year 2024.

Ikechukwu Iheagwam, Regional Director (East Africa) Agusto & Co. expressed delight for supporting BURN Manufacturing in providing a Second Party Opinion (SPO) on this landmark issuance of the first-ever green bond to finance clean cooking in Africa.

“BURN displayed transparency in its pursuit to reduce greenhouse gas emissions following the very detailed scientific process backed by international standards and robust laboratory testing to ensure that the cookstoves consume less wood and charcoal fuel at ISO/IWA Tier 4 thermal efficiency ratings levels,” Iheagwam said.

“While this project is expected to have a significant positive environmental impact in terms of tons of firewood saved and tons of carbon dioxide emissions mitigated for each stove manufactured, the catalytic social, financial, economic and health benefits are quite compelling,” Iheagwam added.

According to Reuben Mabishi, head of research at Dry Associates Investment Bank, the company is proud to have been the Transaction Advisor on BURN’s Green Bond programme.

“The Green Bond programme underscores the opportunities available for fixed-income investments in Kenya to catalyze capital formation, employment, and economic growth,” Mabishi said.

“We are attracted to BURN for the leadership team’s focus, green finance acumen and the scale and professionalism of BURN’s manufacturing operation in Kenya. BURN’s export growth story is a stellar example that Kenya can indeed deliver quality to the world,” Mabishi added.

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BURN Issues Usd $10m Green Bond to Support Clean Cooking In Sub-Saharan Africa

Posted on by TIMOTHYRADIER
  • First-ever green bond issued in Sub-Saharan Africa designated for clean cooking financing.
  • Proceeds from the green bond will accelerate the distribution and adoption of sustainable cooking solutions to households across Africa.

Nairobi, 27th October 2023… BURN Manufacturing (BURN), the world’s leading clean cookstove manufacturer, distributor, and carbon-offset project developer, announces the issuance of Sub-Saharan Africa’s first-ever green bond designated for clean cooking financing of USD $10 Million.

The proceeds from the bond will allow BURN to increase existing manufacturing capacity in Kenya as well as launching a new manufacturing facility in Lagos, Nigeria. Production will increase from the current 400,000 units per month to 600,000 units and will produce a range of life-saving biomass, electric and LPG stoves.

BURN stoves have been independently verified by reputable institutions such as University of Pennsylvania, University of Chicago, as well as through a comprehensive impact assessment survey conducted by Yunus Social Business. The stoves have consistently been proven to provide substantial health, financial, and climate action benefits. The funds from the Green Bond are poised to extend these benefits to an extra 2 million households in the year 2024.

“Our decision to issue the first green bond to support clean cooking underscores our strong belief in the power of financial innovation to drive positive environmental and social change. Leveraging benefits such as investment communities’ interest in green financing and potential tax advantages to investors, green bonds have gained considerable traction in recent years. BURN is excited to deploy this innovative instrument to catalyze sustainable development” said Peter Scott, CEO and Founder of BURN.

The bond issuance was supported by DRY Associated Limited acting as the Placement Agent. FSD Africa, a specialist development agency funded by UK International Development, played a key role in providing technical input on the bond framework and contributing technical assistance for the second-party opinion which was conducted by Agusto & Co., the leading Pan-African Credit Rating Agency and Green Bond Verifier.

Commenting on the announcement, Evans Osano, Director, Capital Markets, FSD Africa, said: “We are proud to have supported this landmark issuance, the first-ever green bond to finance clean cooking activities in sub-Saharan Africa. Biomass fuel is the main source of energy for cooking for the majority of households in Africa and the proceeds from this capital raise will support these households to transition to more sustainable alternatives. These are not only better for the environment but also have health benefits from the reduction of particulate and carbon monoxide emissions which particularly impact women given their greater exposure.”

Ikechukwu Iheagwam, Regional Director (East Africa) Agusto & Co. Said “We are delighted to have supported BURN Manufacturing in providing a Second Party Opinion (SPO) on this landmark issuance of the first-ever green bond to finance clean cooking in Africa. BURN displayed transparency in its pursuit to reduce greenhouse gas emissions following the very detailed scientific process backed by international standards and robust laboratory testing to ensure that the cookstoves consume less wood and charcoal fuel at ISO/IWA Tier 4 thermal efficiency ratings levels. While this project is expected to have a significant positive environmental impact in terms of tons of firewood saved and tons of carbon dioxide emissions mitigated for each stove manufactured, the catalytic social, financial, economic and health benefits are quite compelling.”

“Dry Associates is proud to be the Transaction Advisor on BURN’s Green Bond programme. The Green Bond programme underscores the opportunities available for fixed-income investments in Kenya to catalyze capital formation, employment, and economic growth. We are attracted to BURN for the leadership team’s focus, green finance acumen and the scale and professionalism of BURN’s manufacturing operation in Kenya. BURN’s export growth story is a stellar example that Kenya can indeed deliver quality to the world” added Reuben Mabishi, Head of Research from Dry Associates Investment Bank.

A 2022 report by the International Energy Agency on the Africa Energy Outlook suggests that achieving universal access to clean cooking fuels and technologies by 2030 requires shifting 130 million people globally away from dirty cooking fuels each year.  The issuance of green bonds provides a crucial avenue for supporting this shift towards the adoption of cleaner cooking solutions for people.

The notes have been issued by way of a private offer to a select group of institutional and qualified investors in accordance with Regulation 21 of the Capital Markets (Securities) (Public Offers Listings and Disclosures) Regulations, 2002. An Information Notice has been provided to the Capital Markets Authority.

About BURN

 Founded in 2011, BURN was created with the aspiration to save lives and forests by revolutionizing the clean cookstove sector. While traditional, inefficient cookstoves can bankrupt families, damage their health and destroy forests, BURN’s best-in-class stoves can save families money on fuel, limit indoor air pollution and protect forests. BURN is now Africa’s leading clean cooking company and one of the only carbon-offset project developers to cover the full carbon value chain, from project design and in-house monitoring to credit issuance. Headquartered in Kenya and with direct operations in 10 African countries, BURN employs 2,500 people across Africa. The company has made and distributed over 4 million clean cookstoves, transforming the lives of over 22 million people and avoiding 17 million tons of CO2 from entering the atmosphere. Learn more at burnstoves.com.

About Agusto & Co.

Agusto & Co. is the leading Pan African credit rating agency and a business information provider, with offices in Nigeria (Lagos), Kenya (Nairobi) and Rwanda (Kigali). Agusto & Co. was licensed by the Capital Markets Authority (CMA) of Kenya as a Credit Rating Agency in 2013. The company is a foremost research house and an expert voice on the major economies, industries and businesses operating in sub-Saharan Africa. Agusto & Co. is an Approved Verifier by the Climate Bonds Standard with the capacity to perform verification of green bonds, projects and assets in Africa. Also, Agusto & Co. is one of the companies that have voluntarily aligned with the International Capital Market Association’s (ICMA) Guidelines for External Reviewers for the adoption of Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles.

Envolt launches pioneering MUR 2.0 billion green bond programme for major solar energy projects in Mauritius, supported by MCB Capital Markets and FSD Africa

Posted on by TIMOTHYRADIER

23rd October 2023, Port Louis, Mauritius – Envolt, the renewable energy production arm of ENL Group, supported by transaction advisor MCB Capital Markets as well as FSD Africa, has announced its intention to undertake a green bond issuance of MUR 2 billion (approximately USD 45 million), with a tenor of between three and seventeen years.

The landmark transaction, under the SADC Green Bond Programme, has been initiated by a first issue of MUR 510 million (equivalent to approximately, USD 11 million) and will be completed by the 31st of December 2028 (as stipulated in the Programme Memorandum), will finance the construction and operationalisation of thirteen new solar farms in Mauritius, boasting an aggregate capacity of 14.4 MW and to be completed over a period of 10-17 months.

The issuance represents a major milestone for the Mauritian renewables sector, as well as the country’s capital markets, being the first green project bond issuance for the financing of a renewable energy in the country. Moreover, these green project bonds will constitute the first of their kind issued in Mauritius under the Green Bond Principles 2021 (as devised by the International Capital Market Association (ICMA)), which are in alignment with global standards and militate against greenwashing by mandating rigorous evaluation of projects and their respective environmental or emissions claims.

Crucially, this bond programme will accelerate the maturity and expansion of Mauritius’ capital markets and advance the country’s efforts to attract private capital investment to the country. As importantly, the bond issuance will contribute to the strengthening of green sustainable finance in Africa, as a demonstration of its capacity to finance vital infrastructure projects indispensable for wider economic development.

The UK Government established FSD Africa in 2012 and has been its sole funder since. Over time, FSD Africa has become the leading financial sector development organisation on the continent. FSD Africa was delighted to support Envolt, as well as its transaction advisor MCB Capital Markets, on the bond programme, the Green Bond Framework and its independent review.

FSD Africa launched its green bonds programme in Kenya in 2017 as part of its mission to make finance work for Africa’s future and has since expanded it to cover 20 African countries including Nigeria, Mauritius, Morocco and the Southern African Development Community (SADC) region, consisting of 16 countries. It works with governments on policy reforms and development to promote private investments and domestic capital mobilisation through green/sustainable bonds and other instruments (including gender bonds) supports banks and corporates to structure and bring these products to market and further supports industry initiatives such as developing a pool of local accredited green bond verifiers. The programme has so far resulted in more than US$ 1 billion worth of transactions for sustainable/climate-linked projects and assets, the creation of more than 50,000 direct and indirect jobs and increased access to clean energy, clean water and clean transport for more than 3 million people.

Gilbert Espitalier-Noel, CEO ENL Group, said: “Our group positions itself as a major player in the renewable energy sector. Our initiatives align with the national strategy to produce up to 60% of Mauritius’ energy needs from renewable sources by 2030. Our green bond program will finance the expansion of our production capacity and enable us to contribute significantly to improve the country’s energy mix and energy security.”

Rony Lam, CEO MCB Capital Markets, said: “We are proud to have advised EnVolt on this transaction, which sets international standards for the issuance of green project bonds in Mauritius. This success reflects the rapid development of the local currency bond market over the past eight years. Mobilising national resources to finance the local economy and infrastructure projects is essential for the development of the African continent.”

Mark Napier, CEO FSD Africa, said: “FSD Africa is pleased to have supported everyone involved in this historic green bond issuance by EnVolt, which we hope sets a precedent for further such transactions not only in Mauritius but also across the wider SADC region, building the strength of domestic African capital markets and, crucially, delivering financing routes for vital energy transition projects which can accelerate Africa’s energy and climate security.”

Charlotte Pierre, British High Commissioner to Mauritius, said: “International bond markets remain among the most effective and good-value options for financing countries’ energy transition and major infrastructure investment programmes, and we hope many more states follow Mauritius’ example.”