21 April 2020 - On 21 and 22 February 2020, a group of experts and government officials gathered in Cote D’Ivoire to discuss how a financial instrument that’s increasing in popularity could accelerate the country’s climate action plans.
UNDP in collaboration with the Climate Bonds Initiative held a “boot-camp” on sovereign green bonds for members of the Ivorian government. In view of the many climate challenges Côte d'Ivoire faces, the country is looking at a range of financing strategies to implement its climate targets as outlined in the nationally determined contributions (NDC). Green bonds are thereby emerging as an attractive financial instrument to accelerate the implementation of the country’s NDC, whilst safeguarding its sustainable development trajectory.
A green bonds “boot-camp” looks at integrating this financial instrument into existing national bond systems
The main objective of this training was to provide a common understanding of green bonds to key stakeholders and to educate them on the requirements of the green financial market and their integration into the existing national bond system. Côte d’Ivoire routinely issues bonds on the international markets but has not done so specifically for green projects.
This initiative reflects once again the need for the Ministry of Environment and Sustainable Development to explore all options to finance Cote d’Ivoire’s ambitious goal to reduce greenhouse gas emission by 28% by 2030.
According to Professor Joseph Séka Séka, Minister of Environment and Sustainable Development, green bonds were created to finance projects that have positive environmental and development outcomes. Therefore, the government of Côte d’Ivoire wishes to mobilize more financial resources to support the contribution of sectors such as energy, forestry, agriculture and transport to the country’s NDC.
The boot-camp brought together a myriad of participants from the Ministry of Economy and Finance, the Ministry of Environment and Sustainable Development, the Central Bank, the National Investment Bank, the financial market regulator of the West African Monetary Union (CREPMF) as well as the ministries in charge of energy, transport, agriculture and forestry which are identified as priority sectors in Côte d'Ivoire's NDCs. The training, which was delivered by the Climate Bond Initiative, focused on: 1) green bonds basics and market overview, 2) market dynamics, information and pricing; 3) labeling and certification, 4) green definition and criteria, 5) public policies, incentives and market developments.
Participant take aways
For the Ministry of Finance, which plans to raise over USD 200 billion in 2020 for priority development projects, the boot camp answered the many questions that the Treasury Department was grappling with on green bonds such as the minimum amount to raise, the eligibility of projects, the requirements green bonds as opposed to regular bonds and even the merits of green bonds compared to regular bonds.
Sectoral ministries saluted the inclusivity of the training and the potential funding opportunities that green bonds will offer to their climate change mitigation projects.
The National Bank of Investment, which has served as an underwriter for the government in classic bonds, realized green bonds as an opportunity to diversify its capacities and eventually access green bonds for its private sector clients. It could also position itself as the government’s underwriter for future green bonds issuance once it has gained the necessary experience.
For its part, CREPMF, has high hope for Cote d’Ivoire’s green bonds. As the regulator of financial markets in the West African Economic and Monetary Union zone, it has already put in place the legal framework for green bonds that countries in the zone are not yet taking advantage of. A first experience from Cote d’Ivoire would send a strong signal to other countries in the WAEMU region.
The Green Bonds “boot camp” is part of the UNDP NDC Support Programme in Côte d'Ivoire funded by the European Union, the governments of Germany and Spain with contribution from the government of Côte d'Ivoire. The programme works in contribution to the NDC Partnership.
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Authored by: Georges Kouassi (Afrique Green Side) and Catherine Diam-Valla (UNDP)
Cover Photo by Eva Blue on Unsplash