Global Green Bond Initiative and African Development Bank Partner to Foster Green Bond Markets in Africa

Global Green Bond Initiative and African Development Bank Partner to Foster Green Bond Markets in Africa

(IN BRIEF) A coalition of development finance institutions and multilateral organizations forming the Global Green Bond Initiative (GGBI) has established a strategic partnership with the African Development Bank to collaborate on technical assistance aimed at promoting green bond markets in Africa. The coalition, which includes entities like the European Investment Bank, European Bank for Reconstruction and Development, and others, signed a declaration during COP28 in Dubai. This initiative, part of the GGBI’s technical assistance program, will leverage the African Development Bank’s expertise to enhance the deployment of green bonds in Africa. Additionally, there’s potential for the African Development Bank to invest in GGBI’s dedicated public-private fund, furthering its commitment to green financing and sustainability in the region. Green bonds play a vital role in attracting private capital for environmentally impactful projects and building robust local capital markets.

(PRESS RELEASE) LUXEMBOURG, 2-Dec-2023 — /EuropaWire/ — The coalition of development finance institutions and multilateral organizations making up the Global Green Bond Initiative  (GGBI ) launched a strategic partnership with the African Development Bank to cooperate on technical assistance to promote green bond markets in Africa.

Representatives for the coalition comprising the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), Italy’s Cassa Depositi e Prestiti (CDP), the Spanish Agency for International Development Cooperation (AECID), Germany’s KfW development bank, PROPARCO of the AFD Group, acting as a consortium of European development finance institutions and the Green Climate Fund (GCF), signed a declaration in Dubai on the second day of the COP28 Summit.

This new strategic partnership is intended to be part of the technical assistance programme of the Global Green Bond Initiative (GGBI) announced by Ursula von der Leyen, President of the European Commission, in June 2023.

The GGBI welcomes the new collaboration with the African Development Bank Group. Thanks to the in-depth and valuable experience of the African Development Bank, this partnership will reinforce the GGBI technical assistance program for its deployment in Africa. In addition, the African Development Bank intends to explore the possibility of investing in GGBI’s dedicated public-private fund, alongside the consortium of European development finance institutions and other public investors, subject to its internal policies and approvals.

The Global Green Bond Initiative will facilitate the flow of private capital from institutional investors into climate and environmental projects in EU partner countries, thereby increasing their access to capital. It will do so notably by providing technical assistance to green bond issuers in emerging markets and developing economies (EMDEs), and by crowding in private investors through a dedicated de-risked fund, which will act as an anchor investor in green bonds issued in EMDEs. The fund’s anticipated impact could spur green investments totalling up to EUR 15-20 billion.

To further strengthen the technical assistance arm of the GGBI, the GGBI coalition seeks to work with strategic partners including regional and local development banks across the globe, in particular to support the origination of green bonds, the development and identification of pipelines of green projects, and the development of credible and coherent green bond frameworks. On 6 September 2023, the GGBI coalition took a first step in this direction with the signature of a strategic partnership with the Inter-American Development Bank (IDB) and the IDB Invest in Cartagena, Colombia.

Full details about the involvement of the participating organisations in specific deals and activities will be worked out in the framework of this cooperation.

The text of the joint declaration signed today is below:

Global Green Bond Initiative: A common objective

Scaling up sustainable finance through Team Europe and strategic partners in Africa

Recognizing the role of green bonds as a key tool in mobilising capital from private investors for investments with environmental impact and in contributing to financing a sustainable recovery

• The European Investment Bank (EIB),
• The Cassa Depositi e Prestiti (CDP),
• The Spanish Agency for International Development Cooperation (AECID),
• The European Bank for Reconstruction and Development (EBRD),
• KfW Development Bank (Germany’s development bank KfW),
• The Société de Promotion et de Participation pour la Coopération Economique (“PROPARCO”) for the whole Agence Française de Développement Group (AFD),
• Acting as a consortium of European Development Finance Institutions,
• As well as the Green Climate Fund (GCF),

All together being the Global Green Bond Initiative Coalition (“WE”),

In the presence of the European Commission (EC):

We intend to join forces to cooperate on technical assistance to support green bond markets on the African continent and enable the development and strengthening of local capital markets through the Global Green Bond Initiative (GGBI).

The GGBI intends to combine different types of possible interventions to strengthen the green bond markets to deliver maximum impact.

Amongst others, the GGBI intends to:

• Mobilise private investors through a dedicated public-private fund, which would act as anchor investor acquiring a portion of green bonds issued by private, sovereign, and sub-sovereign entities in EMDEs and attract further investors at transaction level.
• Support green bond issuers by providing capacity building and technical assistance at country level. This may include helping partner countries develop credible and interoperable green bond frameworks to identify a pipeline of green projects (including infrastructure projects) and to carry out the issuance ensuring high quality reporting.

Within this context, the consortium of European Development Finance Institutions and the GCF (via its Project Preparation Facility window) are looking forward to collaborating with strategic partners including regional and local development banks across the globe that can contribute to the GGBI technical assistance programme.

On 6 September 2023, the GGBI coalition strengthened the GGBI’s network of technical assistance partners with the signature of a first strategic partnership with the Inter-American Development Bank (IDB) and the IDB Invest in Cartagena, Colombia.

The GGBI was mentioned by the European Commission President Ursula von der Leyen at the Africa Climate Summit in Nairobi on 5 September 2023 as a key initiative to help grow Africa’s green bond market.

Today, WE intend to continue building the network of strategic technical assistance partnerships with the African Development Bank Group.

This partnership with the African Development Bank Group is intended as a strategic reinforcement to the GGBI technical assistance program for its deployment in Africa, given its in-depth and valuable experience. The African Development Bank Group also intends to explore the possibility of investing in GGBI’s dedicated public-private fund alongside the consortium of European Development Finance Institutions and other public investors, subject to its internal policies and approvals The experience of the African Development Bank Group in Africa brings tools and knowledge to promote, for example, support for pipeline origination, development of national taxonomies, capacity building and reporting, and use of credit enhancement instruments.

The Signatories acknowledge and agree that this present letter of intent is not a binding agreement and does not represent any commitment with regard to funding on the part of the Signatories. Any cooperation between, and commitments by the Signatories that may be formalized will be subject to separate agreements defining the applicable terms and conditions for such commitment, that may be executed by the Signatories’ authorized representatives subject to and pursuant to each of the Signatories’ policies, laws, rules, regulations and procedures and their internal approvals (including the prior approval by each of the Signatories’ decision-making bodies, or any other approval that may be required).

Background information

Green bonds are debt sold to investors with a commitment to use all the proceeds for green investments. First launched in 2007, they have become globally recognized as a key tool in mobilizing capital from private investors for projects with environmental impact, thus contributing to finance sustainable development. The GGBI coalition sees a potential in green bonds to also develop and strengthen local capital markets in development countries.

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SOURCE: European Investment Bank