The Finance Ministry is in discussions with the African Development Bank towards the issuance of the country’s first green bond.
The bond would raise funds which would be dedicated to climate-mitigation, adaptation and other environmentally friendly projects.
If this goes through, Ghana will be the first in the sub-region to issue that bond. Early this month, the Fiji government issued a similar bond which raised some $50 million.
A Deputy Governor of the Bank of Ghana, Dr. Johnson Asiamah told Starr Business, the issuance of the bond will go to support efforts by the bank to promote sustainable banking.
“It’s something that the AFDB is discussing with government so that is not something we are likely to see in the short term. These are bonds that are used in other countries more or less, targeted at areas that are environmentally friendly and hopefully that can support environmental activities across the country,” he disclosed.
SUSTAINABLE BANKING GUIDELINES
He also announced that the Central Bank will by first quarter of next year, introduce a set of guidelines on sustainable banking.
These guidelines are to encourage banks and other financial institutions to include the financing of environmentally friendly projects in their framework. Presently, only four banks in Ghana are committed to sustainable banking.
Many financial service providers shy away from financing green projects due to the high level of risks they come with.
Dr. Asiamah said banks will not be compelled to practice sustainable banking, although it is the hope of the regulator that more of them will buy into the concept.
“There’s a working group that is promoting sustainability principles across the banking industry. That working group is made up of the banking industry; we have the Association of Bankers, Environmental Protection Agency and of course our staff. The idea is to come out with a set of guidelines for the industry. During the first quarter of next year, those guidelines should be ready which we will issue to the industry”, he explained.
SPECIALIZED LENDING SCHEMES
As part of this sustainability drive by the BoG, it is coming out with specialized lending schemes which will support green financing.
“We are working on some specialized lending schemes which would be managed by us but commercial banks can access it. These can be administered for business, etc all in an attempt to put emphasis and in an attempt to provide for environmental risks. Currently we don’t have many of such”, he added.
GREEN FINANCE CONFERENCE
He was speaking at the Green Finance Conference in Accra organized by the African Guaranty Fund, with support from the International Trade Center and the Nordic Development Fund.
The conference provided a platform to discuss the funding of climate change mitigation and adaptation, climate conscious investment, and the potential for climate change regulation to spur the development of new products and services for individuals and SMEs
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