AFRICA: African ESG bonds hit $4.4bn, says report

The value of international loan securities issued by African entities to raise funds for investments complying with Environmental, Social, and Governance principles has hit $4.4bn in 2024.

According to an Ecofin Agency report on Monday, the value of ESG bonds between January and February 2024 had surpassed the $1.4bn raised in 2023.

The African Development Bank has been a significant player in the segment.

In January 2024, AfDB successfully tested an issue of social bonds worth $2bn and issued hybrid sustainable bonds of $750m.

Another player in the sector is the Arab Bank for Economic Development in Africa.

“With the support of the African Export-Import Bank as the lead arranger, BADEA has issued up to €500m. So far, this market momentum has benefited the French financial group BNP Paribas, which currently leads the ranking of arrangers for this type of bonds on the continent, with a 17.5 per cent market share. Following are the American institutions JPMorgan and Bank of America Securities,” part of the report read.

ESG bonds continue to grow in Africa, in line with a booming global market.

The total value of emissions of this type is expected to reach $950bn in 2024, according to figures and estimates from the rating agency Moody’s.

It noted that those financial products were supported on the continent by development finance institutions like the AfDB, which in 2023, supported initiatives from two countries (Egypt and Cote d’Ivoire) in that regard.

“Several local markets are also developing, notably in sub-regions like the West African Monetary Union where the main agency in charge of managing the money market (UMOA-Titres) issued, at the end of 2023, the first ESG bonds in the sub-region,” it stated.