DBSA launches its first R3.6bn green bond
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JOHANNESBURG - THE DEVELOPMENT Bank of Southern Africa (DBSA) yesterday launched its first green bond, worth €200 million (R3.59 billion), in its bid to increase its role in climate finance.
The bond was issued through a private placement with the French development finance institution, the Agence Française de Développement.
The bank said the bond would be structured in alignment with its recently released Green Bond Framework.
The framework reiterates the DBSA's commitment to playing a role in the just transition to a low-carbon economy.
It is aligned with the International Capital Market Association Green Bond Principles.
The bank was also instrumental in the development of the Renewable Energy Independent Power Producers' Programme, and is accredited to the Global Environment Facility and the Green Climate Fund (GCF).
In partnership with the GCF, the DBSA has implemented large-scale programmes which support the transition to a low-carbon economy.
These include a lending facility set up to encourage private sector investment in climate-related projects in southern Africa.
The bank said this green bond would help finance domestic projects that contribute to the green economy, which is part of South Africa's National Development Plan (NDP).
“The DBSA green bond issuance will be applied to projects that contribute to climate mitigation and/or adaptation; that are aligned to the NDP objective of an 'environmentally sustainable and equitable transition to a low-carbon economy'; and that are aligned to the sustainable development goals,” it said.
Last year, Economic Development Minister Ebrahim Patel indicated the government would start issuing green bonds to drive infrastructure investment of around R2.3 trillion to make the economy more resilient.
So far, South Africa has issued R9.3bn of green bonds on its national stock exchange.
Patel said development finance institutions would start issuing green bonds, which could apportion a prudent amount of funds towards green economy initiatives.
“We can be prudent while we utilise a portion of the funds for growth and development investments.”
President Cyril Ramaphosa's new growth plan, the Economic Reconstruction and Recovery Plan, allocated infrastructure investments according to three main sectors – energy, network industries and social upliftment.
Anchor Capital's fund manager, Stephán Engelbrecht, said infrastructure investment was a very good path to pull an economy out of a slump on condition that investment was made into those projects which the country's economy actually needs to grow.
“Given the debilitating impact that load shedding has had on the South African economy, we firmly believe that investment in South Africa's electricity grid will help drive future economic growth, while also ensuring a more sustainable energy mix going forward,” Engelbrecht said.