Development of the green bonds market in Ghana will advance the country’s effort towards achieving the Sustainable Development Goals (SDGs), Courage Kingsley Martey, senior economist with Databank Research, has said.
This week, the International Finance Corporation (IFC) and the Securities and Exchange Commission (SEC) announced a partnership to facilitate investments in projects that address climate and environmental issues through green bonds.
Under the agreement, IFC, a member of the World Bank Group, will help the SEC develop guidelines for issuers and investors in green bonds in Ghana.
In an interview with Business24, Mr. Martey said, “The COVID-induced shock to public finances in most countries has weakened the chances of developing countries achieving all their SDGs by the target date of 2030. So, these green financing instruments are key to helping the country move towards that target.”
Green bonds are debt securities issued by financial, non-financial, or public entities, whose proceeds are used to finance 100 percent environmentally-friendly projects. The overall market size of green bonds is estimated at US$100tn.
The introduction of green bonds will give investors opportunities to finance green buildings, clean transportation, renewable energy, sustainable water management, and other climate-friendly projects.
Some experts have said that the market, when developed, will support Ghana’s transition to a lower-carbon future, as specified in the country’s agreed contributions under the Paris Climate Agreement.
According to Ghana’s intended nationally determined contribution (INDC) document, over a 10-year period, the country needs about US$22.6bn in investments from domestic and international public and private sources to finance its climate actions, starting from 2020.
Out of the total, US$9.81bn, representing 45 percent, is needed for mitigation, whereas the remaining US$12.79bn will be required for adaptation.
Mr. Martey said the green bond market should provide diversity in investment securities and the investor base in the Ghanaian fixed income market, giving pension funds and other fund managers an extra class of securities in their portfolios to reduce risk.
