Government eyes green bonds after positive response

 Green bonds are fixed income securities that raise capital for projects that support the combating of climate change and investment in sustainable development such as renewable energy, energy efficiency, green transport and waste-water treatment.

The government now wants to emulate the private sector in utilising this financing opportunity, which attracts global financial institutions.

“We are at an advanced stage of drafting documents that comply with capital market standards so that government institutions can issue green bonds and speed up strategic development projects,” said the commissioner for financial sector development in the Finance ministry, Dr Charles Mwamwaja.

He was speaking during the official unveiling of research findings on crowdfunding for youth conducted by Mzumbe University and funded by the Danish government.

“Investors have appetite for green bonds, which are currently a global trend. In addition to continuing to create an enabling environment, government institutions will soon start entering these markets,” Dr Mwamwaja said, adding that the government wanted to diversify its sources of financing.

He added that green bonds had been predominantly utilised by the private sector, particularly the banking industry and the government’s focus was now on utilising the opportunity to finance development projects.

“In this regard, I challenge universities and other public institutions to use this alternative financing opportunity. Waiting for funds from the Treasury to implement projects can take a long time and is thus not sustainable.”

In another development, Dr Mwamwaja said the government was in the final stages of drafting a law to be known as the Secured Transaction Loan Act, which would allow access to credit even for people with no fixed collateral.

He also said the government would next month launch a new small and medium enterprises (SMEs) strategy that would provide access to financing for this group.

Commenting on green bonds, a University of Dar es Salaam lecturer, Prof Neema Mori, said they were currently doing well in the market and the future was promising.

She added that universities, for example, could issue education bonds and were sure to find investors because it was an area that targeted a certain group of people.

“We have seen in the banking industry that green bonds are doing well. Others can follow suit and raise money for development,” Prof Mori said.

A senior lecturer at Mzumbe University, Prof Haruni Mapesa, said African countries were finding it difficult to raise adequate funds and the bonds created opportunity to increase the circulation of money.

“There are many people who have money, but don’t know what to do with it, for example, pensioners. It is also a good opportunity for colleges to increase their income,” he said.

The project coordinator at Mzumbe University, Dr Nsubili Mwalusaka, said crowdfunding created awareness among the youth on how to access financing to expand their businesses.

“We are presenting the initial results of our research after training some entrepreneurs. We have discovered that if they are made aware of the existence of these platforms and how to apply for loans, many of them can improve their businesses,” she said.

In collaboration with the Small Industries Development Organization (Sido) in Dar es Salaam, Mwanza, Arusha, Mbeya, and Morogoro regions, 187 young people have been provided with training and  100 were able to secure loans to support their businesses worth over Sh25 million.

Dr Mwalusaka said researchers established that 56 percent of samples were aware of the crowdfunding, while 44 percent were not.