African entities have raised a total of $4.4 billion through international loan securities issued for investments adhering to Environmental, Social, and Governance (ESG) principles in 2024, according to a recent report by Ecofin Agency.
The report highlights a significant increase from the $1.4 billion raised in 2023, signaling a growing trend towards sustainable investments in the region. Notably, the African Development Bank (AfDB) has emerged as a key player in this segment, with successful issuances of social bonds worth $2 billion and hybrid sustainable bonds of $750 million in January 2024.
Another prominent participant in the sector is the Arab Bank for Economic Development in Africa (BADEA). With support from the African Export-Import Bank, BADEA issued bonds amounting to €500 million. Leading the arrangers for these bonds in Africa is the French financial group BNP Paribas, capturing a 17.5% market share, followed by American institutions JPMorgan and Bank of America Securities.
The growth of ESG bonds in Africa aligns with the global trend, with the total value of emissions expected to reach $950 billion in 2024, according to projections by Moody’s rating agency. These financial products receive support from development finance institutions such as the AfDB, which backed initiatives in Egypt and Cote d’Ivoire in 2023.
Additionally, local markets are witnessing significant development, particularly in sub-regions like the West African Monetary Union. The issuance of the first ESG bonds by the main agency managing the money market in the union, UMOA-Titres, at the end of 2023, signifies the region’s commitment to sustainable finance.
The rise of ESG bonds underscores a broader shift towards sustainable investment practices in Africa, driven by both international and domestic stakeholders aiming to address environmental, social, and governance challenges while pursuing financial returns.
