Green finance

The green bond opportunity at county level in Kenya

September 5th, 2023

In October 2022, with the approval of The National Treasury and Economic Planning, FSD Kenya launched a project to assess the opportunity of green bond issuances by County Governments.

The 2010 Kenyan Constitution devolved important natural resource and environment related sectors such as agriculture, water provision, and transport. Counties have a pertinent role to play in Kenya’s sustainable development agenda which can only be realised if counties have the requisite capacities and capabilities including financial resources.

Yet at present, counties face a funding gap, with most, if not all, of them fully reliant on transfers from the National Treasury. County bonds, particularly green county bonds, present an opportunity for counties to generate resources for the much-needed development of county infrastructure such as water piping, county roads and the development of agriculture, just to name but a few sectors and activities, in a green and climate-resilient manner.

10 counties selected

  • Embu
  • Kirinyaga
  • Kisumu
  • Laikipia
  • Makueni
  • Nairobi
  • Nandi
  • Taita-Taveta
  • Vihiga
  • Wajir

The project has assessed 10 counties and their potential to access and apply to the bond market for the development of green activities as follows:

  • Economic and fiscal assessment of county fiscal performance (historical and projected), strengths, challenges, and ability to take on (additional) debt including the consideration of potential revenue generation sources.

  • Credit risk assessment that estimates the county government’s relative likelihood of defaulting on its obligations from the listing.

  • Green asset and activity assessment on availability of green investment opportunities in the selected counties.

  • Green finance capability assessment on county government skills and ability to manage green financial instruments (with a focus on green bonds) and related projects.

Project partners

  • FSD Kenya: Project Originator, Leader and Funder.

  • Agusto & Co: Lead Consultant: Registered credit rating agency in Kenya, Nigeria and Rwanda and Approved Verifier by the Climate Bond Standards Board (as the first company of African origin) to perform verification of green bonds, projects, and assets in Africa.

  • Capital Markets Authority: An independent public agency established by an Act of Parliament, Cap 485 A under the National Treasury and Economic Planning. CMA is charged with the prime responsibility of supervising, licensing and monitoring the activities of market intermediaries, including the Stock Exchange and the Central Depository and Settlement Corporation. It also regulates all licensees under the Capital Markets Act, including Online Forex, Commodities and Regulated Exchanges.

  • Nairobi Securities Exchange: Private Sector Partner: NSE is home to Kenya’s first green bond issuance by Acorn ($41mn). This project contributes to NSE’s green finance strategy to support the development of a pipeline of green investments and facilitate engagement with potential issuers and investors.

  • ADA Consortium: ADA consortium engages sub-national government and stakeholders to provide on-site coordination, site visit and meeting arrangements.

Session structure and speakers

The objective of this session was for The National Treasury and Economic Planning, FSD Kenya in partnership with the County Green Bond Opportunity Partners to share further details on the project, including sharing preliminary findings and insights followed by a panel discussion, and Q&A session.

Event recording

Click here for a slide deck of the overview of the green bond project 

Click here for a presentation presenting key findings of the green bonds project as at August 2023




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