IMPACT OF GREEN BONDS IN AFRICA RESEARCH REPORT

The report assesses the nascent green bond market in Africa, which has raised approximately USD 9.6 billion through 76 issuances since 2013. While the market is growing, it remains a niche segment constrained by high issuance costs—up to 5% of total deal value compared to 0.9% in Europe—and macroeconomic instability. The analysis finds that green bonds provide financial additionality for issuers through faster capital raising and access to diverse investors, but primarily fund mitigation projects, with only 7% of proceeds going to pure adaptation. Social inclusion and gender considerations are generally absent from design but occur as indirect co-benefits, such as job creation. The report recommends the development of an African Sustainable Finance Taxonomy, the mandatory inclusion of 'Do no harm' and gender provisions, and the use of project preparation facilities to make adaptation projects more bankable.

• Africa's green bond market is small compared to global scales, accounting for less than 1% of global issuances and approximately 0.3% of the total global value.
• The market has shifted from being dominated by sovereign and multi-lateral issuers to a higher private sector presence; financial institutions and businesses accounted for over 60% of issuance value between 2019 and 2024.
• Issuance costs in Africa are significantly higher than in Europe, with smaller African issuers potentially incurring expenses up to 5% of the total bond value, whereas the average in Europe is approximately 0.9%.
• There is a significant imbalance in funding priorities: while mixed-use and mitigation projects dominate, projects purely focused on adaptation and resilience are rare, representing only 7% of proceeds.
• Blended finance, specifically credit guarantees and technical assistance, is essential for market entry and investor confidence. For example, InfraCredit's guarantee for North South Power (NSP) contributed to a 60% oversubscription of its first bond.
• Green bonds provide 'financial additionality' by allowing issuers to access a wider pool of investors and raise capital faster and in larger volumes than conventional bank loans.
• Environmental impacts are notable but often self-reported; for instance, the African Development Bank's portfolio has avoided approximately 43.2 million tonnes of GHG emissions and saved 110 million cubic metres of water.
• Social inclusion and gender criteria are typically not integrated into green bond designs, though indirect benefits occur. Acorn's green bond created 1,857 jobs, with 41% held by women.
• Sovereign green bonds act as a catalyst for the private sector by providing a proof of concept. Nigeria's 2017 sovereign issuance paved the way for corporate entries by Access Bank and North South Power in 2019.

APA

FSD Africa (2025). IMPACT OF GREEN BONDS IN AFRICA RESEARCH REPORT. https://fsdafrica.org/wp-content/uploads/2025/05/Green-Bond-Report_Final-report-20.03.2025.pdf

Chicago

FSD Africa. IMPACT OF GREEN BONDS IN AFRICA RESEARCH REPORT. 2025. https://fsdafrica.org/wp-content/uploads/2025/05/Green-Bond-Report_Final-report-20.03.2025.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=IMPACT OF GREEN BONDS IN AFRICA RESEARCH REPORT |date=March 2025 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Green-Bond-Report_Final-report-20.03.2025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2025impact, author = {{FSD Africa}}, title = {{IMPACT OF GREEN BONDS IN AFRICA RESEARCH REPORT}}, institution = {FSD Africa}, year = {2025}, month = mar, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Green-Bond-Report_Final-report-20.03.2025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }