Rahma Ahmed
By Ahmed Rahma
The Executive Head of Sustainable Finance at Standard Bank Group, Mr Nigel Beck, has described the share of Africa in the global sustainable finance market as “negligible.”
However, he stated that the continent was starting to play catch-up as more corporates and investors recognise the benefits that these funding solutions offer, including getting lower funding rates if they achieve various predetermined ESG outcomes.
He noted that sustainable finance could help drive Africa’s recovery from COVID-19 while also incentivising much-needed investments in the green economy and social development.
Speaking on the issue, he disclosed that the global pandemic, which has set back the continent’s growth and demanded new approaches to economic development, has highlighted the importance of sustainability and raised the focus on environmental, social and corporate governance (ESG) issues.
“Even before COVID-19, the sustainable finance market was flourishing. In 2019, sustainable debt issuances reached a record high of $415 billion globally – up 60 per cent from the prior year.
“Green bonds still dominate the sustainable finance market, but other products, including green loans, social bonds and sustainability loans, are fast playing catch-up, with the market becoming increasingly diversified to meet growing demand,” he said.
Mr Beck added, “We believe that Africa is primed for a sustainable finance boom, given its immense potential in the renewable energy space and its ongoing developmental challenges.
He also disclosed the launch of Standard Bank’s first ever-green bond, via a private placement with the International Finance Corporation (IFC), in March 2020 and the $200 million bond, will be used by the group’s Sustainable Finance Business Unit to fund eligible green assets, renewable energy, energy efficiency, water efficiency and green buildings – aligned to our Sustainable Bond Framework.
He further added that partly due to the impact of COVID-19, they are already seeing a surge in client interest in financial products that promote a more sustainable economy.
“For instance, the pandemic is boosting demand for bonds that fund social projects, and this trend is expected to last well into the future. Corporates are increasingly expected to maximise their social impacts and uplift the communities in which they operate.
“Given Africa’s immense unmet energy needs, we expect to see a wave of decentralised green energy projects as corporates and municipalities look to secure reliable and affordable power supplies while also furthering their ESG agendas,” he added.
