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African ESG bond issuance hits record $4.4bn in early 2024

Monday, 18 March 2024 18:14
African ESG bond issuance hits record $4.4bn in early 2024

(Ecofin Agency) - The record for raising financial resources through ESG (Environmental, Social, and Governance) bonds has already been broken this year in Africa. The African Development Bank (AfDB) continues to be a significant player in the sector. However, this development hides a significant margin for progress, given the continent's needs.

The value of international loan securities issued by African entities to mobilize resources for investments deemed responsible (ESG) reached $4.4 billion between January and February 2024. This represents almost four times the total of ESG bonds (complying with requirements related to social, environmental, and governance issues) from the region in 2023, which amounted to $1.4 billion.

The key African driver of this market in early 2024 has been the African Development Bank (AfDB). In January 2024, this pan-African development finance institution successfully tested an issue of social bonds worth $2 billion and issued hybrid sustainable bonds of $750 million.

Another institution that has also entered this market is the Arab Bank for Economic Development in Africa (BADEA). With the support of the African Export-Import Bank (Afreximbank) as the lead arranger, BADEA has issued up to €500 million. 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 17.5% market share. Following are the American institutions JPMorgan and Bank of America Securities.

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 $950 billion in 2024, according to figures and estimates from the rating agency Moody's. These financial products are 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 this 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. However, there remains room for improvement. Regulations for this type of products are still under development, and the demand from local investors remains relatively modest.



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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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