By Lorraine Dixon

Business, Environment and Sustainability Specialist – KOEE

Combating climate change is one of the greatest challenges of our time, requiring far more financing than governments alone can provide.  Climate change is increasingly viewed as a business opportunity, opening many profitable ways for investors to help protect the planet. Kenya’s Green Economy Strategy and Implementation Plan (GESIP) recognises the importance of banks and financial institutions in developing and providing products and services that support green economy entrepreneurs and enterprises. Kenya needs about Kshs 2.4 trillion to support green economic activities in areas such as afforestation, renewable energy and public transport (GESIP, 2016). Finances can be leveraged from green bonds, carbon pricing, feed-in tariffs, subsidies, climate trust funds, green investment banks as well as blended finance from loans, grants, guarantees and insurance.

A green bond or a climate bond is a fixed-income security whose proceeds are earmarked exclusively for projects with environmental benefits, mostly related to climate change mitigation or adaptation but also to natural resources depletion, loss of bio-diversity, and air, water or soil pollution (CMA, 2019). They are essentially loan agreements between the bondissuer and an investor, in which the bondissuer is obligated to pay a specified amount of money at specified future dates. Green bonds are an important channel for low-carbon climate-resilient investments to support the transition to a sustainable economy. The green label is a discovery mechanism for investors; it enables the identification of climate-aligned investments with limited due diligence from investors, which reduces market friction and facilitates growth in environmentally friendly investments.

Photo Credit: Kenya Broadcasting Corporation 

Kenya signed on to some bold environmental impact deliverables at the 21stannual Conference of the Parties (COP 21) in Paris, France under Intended Nationally Determined Contributions, or Kenya’s “in-house targets”. The country has set out to lower greenhouse gas emissions by 30% by 2030 with agriculture, urban development, energy production and transport as the biggest contributors. Many Kenyan technology entrepreneurs are building businesses in these areas that offer value for end users, as well as mitigate or reverse negative effects on the climate. Scaling up these efforts therefore requires a significant increase in access to appropriate finance. 

Nigeria and South Africa are the first countries on the African continent to issue a security that raises funds for environmental projects after the launch of their respective Sovereign Green Bonds. The Green Bonds Programme Kenya (GBPK) was launched in March 2017 with the aim of catalysing the market for green bonds. The programme’s patron is the Governor of the Central Bank of Kenya and is a partner initiative between Kenya Bankers Association (KBA), Nairobi Securities Exchange (NSE), Climate Bonds Initiative (CBI), Financial Sector Deepening (FSD) Africa and the Dutch Development Bank (FMO).

Kenya Bankers Association (KBA) announced plans by Kenyan banks to issue a green bond by end of 2019 to raise money in the war on climate change.  The green bond is touted as the best instrument to achieve sustainability, considering the environmental, social and financial needs of both the country and the banking sector. The KGBP, can therefore be seen as a progressive effort to unlock new sources of long-term investment for environmental projects, particularly for micro and small enterprises (SMEs) in Kenya. 

A study commissioned by KGBP with support from Kenya Bankers Association and WWF Kenya revealed that Kenya’s manufacturing, transport and agriculture sectors have combined green investment and financing opportunities valued at KSh87 billion over the next five to 10 years. The study sought to quantify the investment opportunity for green investments in Kenya, identify barriers to the issuance of green bonds and solutions for creating bankable projects. Learn more about the study results here


Government of Kenya (2016), Green Economy Strategy and Implementation Plan 2016-2030, available from

Capital Markets Auhotrity (2019), Green Bond Market Launched in Kenya, available from
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