Amid the pressing need to meet the demand for financing green projects in Africa, the Green Exchange – the first of its kind on the continent – is set to be launched in Ghana by mid-July 2022, specifically dedicated to corporate green bonds with a target of US$5billion in issuances over five years.
The exchange is seeking to help local businesses issue green bonds at between 4 percent and 6 percent in contrast to the traditional 16 to 21 percent interest rates for raising debt in hard currency.
In an interview in Accra, Chief Executive Officer of The Green Exchange, Orla Enright, said the Fintech Hub to be headquartered in Ghana’s capital of Accra will make it easier for corporate issuers to raise green bonds and investors to meet their green investment objectives.
“We have seen a great reaction from companies in Ghana so far when presenting the opportunity to issue a corporate green bond, and we are confident we will continue on that trajectory,” Orla said.
Following President Joe Biden’s promise last year to double developing countries’ climate support to US$11.4billion by 2024, North American institutional investors have expressed keen interest to invest in greener companies of Africa.
“While global investment in green bonds is expected to reach US$1trillion by the end of 2022, the African market contributes only 0.4 percent of the global market base for green bonds,” Orla said.
The Green Exchange wants to drive this percentage, encouraging African companies to issue green bonds.
“Recognising the underlying potential and opportunity, we will be targetting an increasing number of North American and Scandinavian institutional funds incorporating ESG as one of their main criteria of investment, which juxtaposed with the demand for Green Bonds issued by leading companies will definitely alter the manner in which investments are fuelled into emerging markets,” Orla remarked.
Orla Enright and Co-founder Diana Boadu Amoatin – the Chief Products Officer of The Green Exchange – are targetting initial listings from Ghana, Kenya and Nigeria to fund wind turbines, electric vehicle charging stations, sustainable housing, solar panel installations, and companies that want to reinvent their operations to become green-compliant.
“At the Green Exchange, we aim at simplifying the onboarding process for Green Bond Issuance to a few steps, with the key component being validating the bonds as green,” Diana emphasised.
“The companies now need to act by asking themselves what is my ESG requirement? How am I making Africa more likely to meet net-zero?” Orla said. “The best way of doing that is by utilising green bonds, ensuring capital is being deployed into a green project.”
To boost liquidity on the platform, Orla and her team will build a thriving secondary market to ensure listed Green bonds are tradable prior to their maturity. “Once the platform goes live in mid-July, the target is to reach a cumulative issuance of US$5billion within five years. Africa is the first stop; then we will focus on other emerging markets to tackle this global issue.”
