Green Exchange: Nigeria, South Africa & Morocco lead Africa’s green bond market

Africa is making significant strides in the green bond market with Nigeria, South Africa, and Morocco leading the pack, accounting for over 97% of green bond issuances. These countries are being supported by multilateral institutions like the African Development Bank and the International Finance Corporation, indicating a growing momentum in green finance across the continent. Orla Enright, the CEO of Green Exchange, recently sat down with CNBC Africa to discuss how to unlock financing for climate projects and green opportunities for investors. Enright emphasized the concept of 'greenonomics,' also known as the green bond effect. This term refers to the economic advantage that comes with listing a green bond compared to a traditional vanilla bond due to the positive impact on the environment. Enright highlighted the need for African corporates to be offered these economic advantages to attract pension funds and asset managers in Nigeria to invest in green bonds. She stressed the importance of strengthening the framework and regulatory support from bodies like the SEC to facilitate easier listing of green bonds for corporates. Despite some progress with green bond issuances in Nigeria, Enright pointed out that challenges remain in incentivizing corporates to choose green bonds over traditional bonds. While green bonds offer benefits like positive public relations and access to new investors, more economic incentives are needed to encourage greater participation. She called for enhanced incentives to push more corporates to list green bonds and contribute to Africa's sustainability efforts. Enright also discussed the growing confidence in the green bond market, driven by support from multilateral financial institutions like the IFC and AFDB. She highlighted sectors like green buildings and renewable energy as areas of focus for corporates, citing successful examples like the ACORN bond for sustainable student housing in Nairobi. Enright emphasized the importance of public-private partnerships and urged Nigeria to tap into its energy resources to drive growth in green industries. Looking ahead, Enright outlined a to-do list for Nigeria, emphasizing the need for raising awareness about the revenue potential of green energy sectors and encouraging corporates to take advantage of available incentives. She stressed the importance of positioning Nigeria as a leader in green technologies, particularly in energy and transportation sectors. As Green Exchange expands its offerings in the Nigerian market, Enright revealed plans to work with independent parties and regulators to position the exchange effectively. While the focus remains on green and ESG (Environmental, Social, and Governance) products, Green Exchange is exploring opportunities to list commodities in a more sustainable manner. Enright highlighted the role of green transportation in commodities trading, citing the use of electric vehicles and sustainable shipping fuel as key considerations. Africa's green bond market is poised for growth, with key players like Nigeria, South Africa, and Morocco setting the pace. With the right incentives, regulatory support, and awareness, African corporates can drive sustainable investments and contribute to the continent's green finance revolution.