Kenya plans to float green bonds in order to boost Foreign Direct Investment (FDI), the capital market regulator said on Tuesday.
Capital Markets Authority (CMA) CEO Paul Muthaura told a media briefing in Nairobi that there is currently a lot of interest among global fund managers on investing in capital markets that offer green bonds.
"We therefore want to position Kenya as a regional hub of green bonds so that it benefit from funds that invest in sustainable business causes," Muthaura said.
The East African nation is currently putting in place guidelines that will define what constitutes a green bond.
The legal framework will be a joint effort of the Kenya Bankers Association as well as the Nairobi Security Exchange.
The CEO said that the green bond will enable Kenya to meet some of its international commitments on reducing green house gas emissions.
Last year, Kenya signed the Marrakech Action Proclamation on Climate and Sustainable Development. Muthaura noted that Morocco is among the first countries in Africa to float a green bond.
"Kenya will also issue a green bond and the proceeds will go to finance projects that will help Kenya mitigate and adapt to climate change," he said.
The market regulator noted that after the global financial crisis that occurred in 2008, international financiers have shifted focus to investing in green financial instruments.
"Green bonds are now seen to be more attractive because they fund sustainable projects," he added.