Webinar – Sustainability Disclosure Updates from Emerging Markets – Wednesday, 13 July 2022

Kenya – Broad stakeholder engagement to empower the issuance of green bonds

Broad stakeholder engagement to empower the issuance of green bonds


Sustainable finance frameworks have provided the foundation for the development of green bonds. Kenya observed the need to align the financial industry with sustainable finance in 2012. This prompted an assessment of awareness and capacity in the industry, and it was found to be very low. Following from this, the KBA engaged at length with banks and financial institutions, providing training and recording what their priorities were. Building their knowledge in sustainable finance enabled the engagement and understanding around new asset classes, in particular green bonds.
Kenya started working toward developing green bonds in 2017; it issued the Green Bond Listing Rules in December 2018, and the Green Bond Guidelines were published in early 2019. Enabled by such policy infrastructure, Kenya issued its first green bond of $4.3 million in October 2019. The KBA, Nairobi Stock Exchange (NSE), Climate Bonds Initiative, Financial Sector Deepening Africa, and the Dutch Development Bank have been working together on the Green Bond Program. The program focuses on four areas of intervention: technical support for potential issuers; training programs for issuers and verifiers; regulation and policy research on demand for green finance; and green bond issuance for Kenya.
However, there have been several challenges on the way and the KBA is working to solve them:

Lack of awareness and capacity: The KBA and its partners have engaged robustly with stakeholders via meetings, trainings, and conferences. In 2017-2018 it organized 14 events attended by 700 potential issuers, investors, and financial intermediaries. This has provided a platform for banks to align definitions, priorities, and principles. As a result, there is now a high level of understanding.

The policy and regulatory environment is not currently facilitating green bond issuance. There is a controlled interest rate regime in Kenya that caps the lending rate for banks at 4 percent above the Central Bank rate. For issuing green bonds, this means that margins are too small for the bank to be a credible business case and the risks can be high. The KBA and banks have been engaging with government and regulators to address this challenge, notably by supporting a caucus in parliament on the SDGs and business.

Kenya issued its first green bond in October 2019. The K sh 4.3 billion ($40 million) Climate Bonds Certified issuance will finance green and environmentally friendly accommodation for 5,000 university students in Nairobi. The Kenyan government is also due to issue green bonds this year and has been using the green bond guidelines developed during the Green Bond Program, which speaks to the success of this work.


The KBA found that engagement has been key to developing a green bond market and maintaining traction. The process has involved partnerships with many different stakeholders—investors, issuers, financial intermediaries, banks, politicians, and regulators—which is key to creating a lasting green bond market. Kenya’s goal goes beyond one green bond issuance: Engaging with stakeholders in all realms of green bonds should create the environment for a lasting green bond market and the sustainability of the Green Bond Program.