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$5 billion in issuances in 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 16-21 percent interest rates for raising debt in hard currency.
In an interview in Accra, the Chief Executive Officer of The Green Exchange, Orla Enright said the Fintech Hub, to be headquartered in Ghana’s capital, 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, we are confident that we will continue on that trajectory,” Orla said.
Following President Joe Biden’s promise last year to double developing countries’ climate support to US$11.4 billion by 2024, North American institutional investors have expressed keen interest in investing in greener companies in Africa.
“While global investment in green bonds is expected to reach US$1 trillion 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 targeting an increasing number of North American and Scandinavian institutional funds incorporating ESG as one of their main criterion 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 targeting 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 emphasized.
“The companies now need to act by asking themselves what my ESG requirement is, 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 tradeable prior to their maturity. “Once the platform goes live in mid-July, the target is to reach a cumulative issuance of US$5 billion within five years. Africa is the first stop then we will focus on other emerging markets to tackle this global issue.”