UN, World Bank Envisage Sovereign Green, Social & Sustainable Bond Market in Africa

ADDIS ABABA – The development of a Green, Social and Sustainable (GSS) sovereign bond market in Africa was discussed in a workshop co-organized by the UN Economic Commission for Africa (ECA) and the World Bank on Tuesday.

In a meeting held virtually, technical experts discussed the importance of building awareness and exploring the potential issuance of GSS bonds in Africa by sovereign issuers or subnational entities.

New market trends such as the inflation-linked green bond issuance from France and the Colombia local currency twin green bond issuance, and the plans for future issuances were also among the discussion points. 

GSS’s key role

Innovative financing solutions are needed for countries across Africa to achieve their ambitious climate investment goals and meet the Paris Agreement commitments.



The GSS bonds can constitute a central part of the financing strategy for sovereigns and subnational entities to fund both mitigation and adaptation investments, according to the organisers of the workshop.

Ahead of the COP27 in Egypt,  ECA’s Deputy chief said Africa faces a mixed landscape for achieving climate ambitions and Nationally determined contributions (NDCs). 

“We urgently need the 100 billion USD per annum promise to be realized, while we need a new financing target which will mobilize the trillions needed,” said Deputy Executive Secretary Hanan Morsy. 

“GSS bonds play a critical role in tapping into resources at the international capital markets to unleash the potential of the green and blue economy in Africa,” Morsy added. 

ECA is supporting member states under various initiatives, such as the Great Blue Wall, the Liquidity and Sustainability Facility, and debt-for-nature swaps, to graduate from the aid dependencies by leveraging market-based innovative finance instruments.

Unlocking Africa’s potential’

According to ECA, Global issuances of GSS debt reached $1.6 trillion in 2021 – more than double the level in 2020, evidencing the surge in investor interest. 

However, Africa is not yet taking full advantage of the market.

“Less than 50 thematic bonds have ever been issued across Africa, and just five of these were from a sovereign,” Jorge Familiar, World Bank Vice President, and Treasurer.

“Unlocking the potential for sovereign GSS bonds in Africa can only be achieved by clarifying market expectations and overcoming the knowledge gap.” 

Most African nations are also currently grappling with multiple challenges posed by the COVID19 pandemic, climate change, and the recent Ukraine crisis. 

“While the ability to mobilize predictable grant resources from traditional concessional finance remains a crucial element in dealing with those challenges, the private sector can also play a conducive role to bridge the financing gaps,” said Jean-Paul Adam of ECA.

“There is a need to provide Africa with affordable and stable sustainable financing, as sustainable finance markets are critical to addressing ‘Africa’s ambitions and achieving Agenda 2063 and the 2030 Agenda,” he added.

‘Interest High’

There is very strong interest from potential sovereign issuers of GSS bonds, according to the World Bank. 



In a recent World Bank Treasury survey of emerging market debt management offices (DMOs) and international investors across all regions, over 75% of DMOs intend to issue GSS bonds. 

These DMOs saw strong potential benefits of tapping the GSS bond market to diversify the investor base, signal a commitment to sustainability, build a local market to motivate private sector issuers, and attract international investors. 

International investors highlighted several reasons for their interest in thematic bonds, including achieving Environmental, Social, and Governance (ESG) impact, developing the thematic bond market, diversifying their portfolios, and serving their investors’ and shareholders’ direct business interests. 

The surveys show strong alignment between issuers and investors that thematic bonds can be essential instruments to finance the vast investments required to meet NDC and SDG ambitions.

“There is a great potential opportunity for sovereigns to tap investor demand for GSS assets both internationally and domestically,” said James Seward, a Senior Financial Officer at the World Bank Treasury.

“However, there are challenges that DMOs cited in issuing GSS bonds, including understanding the principles and standards for GSS bonds, the cost and intricacies of the issuance process, and difficulty identifying eligible expenditures and projects. 

“At the moment, there are strong headwinds for emerging markets in the capital markets, but this may allow time to prepare and build capacity when the time is right to issue GSS bonds”, said Seward. 

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