Developing a green bond market in Kenya : perspectives from practitioners and lessons from developing markets

Abstract

Green bonds have recently emerged as a financing instrument with significant potential for funding green projects. However, Kenyan issuers have been slow in issuing green bonds despite there being multiplicity of bankable green projects. This paper shifts focus from developed green bond markets to the developing market in Kenya. The paper offers perspectives from practitioners about factors which they consider as enabling and inhibiting the growth of the Kenyan green bond market. Findings from the interviews point to lack of awareness, weak drive for responsible investment, low institutional capacity and limited expertize of practitioners, inadequate risk management tools and significant issuance and monitoring costs as the main barriers to growth of the market. Similarly, a wide pool of investors and strong government support were identified as factors that could enable growth of the market. Lessons drawn from other developing markets that offer insights into the Kenyan market are discussed.