Exploring the potential of Green Bonds for SDGs financing in Ghana

The deadline for the achievement of the Sustainable Development Goals (SDGs) is fast approaching, and 2020 commences the decade of action to accelerate SDGs implementation. Financing the SDGs remains a major challenge for many countries especially those in the developing world. Exploring different innovative ways of SDGs financing within integrated national financing frameworks for which Ghana is a pioneer country, bring to the fore the option of green bonds.

Green bonds are debt securities issued by financial, non-financial or public entities where the proceeds are used to finance 100% environmentally friendly projects. Generally, the overall bond market size of green bonds is estimated at $100 trillion, yet demand is being unmet, calling for more uptakes.  

As a step towards the potential issuance of green bonds in Ghana, the Ministry of Finance initiated a process of tapping into green and SDG related bonds. A partnership with the United Nations Development Programme (UNDP) and the Ministry of Finance was established. UNDP and the Ministry of Finance are training key national stakeholders to improve their knowledge on green and SDG related bonds to facilitate Ghana’s active participation in the green bond markets.

“The issuance of green bond in Ghana will unlock the local capital market potential and allow Ghana to become the leader in sustainable growth in Africa”, noted Matteo Bigoni, Head of Certification, Climate Bonds Initiative and a Facilitator at the Green Bonds Bootcamp.   

Climate change is regarded as the greatest risk of our time, as it poses severe threat to development especially to the poorest and most vulnerable. In line with the Paris Agreement, which sets out a global framework to combat climate change, Ghana has committed to ambitious targets to cut its carbon footprint in the country’s Nationally Determined Contributions (NDCs) document for climate action. Ghana needs about USD 22.6 billion investments from domestic and international public and private sources to finance its climate actions, starting this 2020. It has therefore become very critical to mobilize more financial resources to support the country’s sustainable development priorities.

“Aligning Government’s financing priorities to the SDGs in line with the country’s 2018-2021 medium-term development plan through innovative financing instruments such as SDG or green bonds is not only strategic but also timely in furtherance of the Ghana Beyond Aid Agenda”, stated Aeneas Chuma, acting Resident Representative of UNDP Ghana.

With green bonds, Ghana can mobilize resources from domestic and international capital markets for climate change adaptation, renewable energy, low carbon transport, sustainable waste management, integrated water resource management, clean transportation and other environmentally friendly projects.

The Green Bond Bootcamp drew about 30 Government officials and the training is being delivered by Climate Bonds Initiative, an international, investor-focused not-for-profit organization working on mobilizing the $100 trillion bond market for climate change solutions.