To boost access to finance for climate-friendly development projects in Tanzania, IFC today announced an investment in CRDB Bank Plc’s first green bond. The investment in Tanzania’s largest commercial bank will help reduce greenhouse gas emissions and enhance climate change adaptation.
Proceeds from the bond will finance sustainable development initiatives including climate-smart agriculture and the development of water, forestry, renewable energy, and green building projects.
IFC played an anchor role and subscribed to 29.3 percent of the bond (equivalent to $20 million in Tanzanian shillings), which was listed on the Dar es Salaam Stock Exchange today. The issuance raised $68.3 million, representing an oversubscription of 429 percent. IFC’s investment in the bond is supported by the International Development Association’s (IDA) Private Sector Window Local Currency Facility.
The green bond is the first tranche of CRDB Bank’s $300 million, multi-currency Medium Term Note program under the bank’s newly established Green, Social and Sustainability Bond Framework aimed at financing green, social, and sustainability projects.
IFC’s support includes a performance-based incentive from the UK-IFC Market Accelerator Program for the Green Construction program to help cover the costs associated with greening Tanzania’s affordable housing developments. At least 40 percent of IFC’s bond investment will be dedicated to supporting green buildings.
“We are delighted to be partnering with IFC in addressing climate change threats that call for global solutions. This historic green bond is in line with the aspirations of our current President, Her Excellency Samia Suluhu Hassan, in driving SDGs,” said CRDB Bank CEO Abdulmajid Mussa Nsekela. “This tranche aims to address various climate challenges through the transformation of the country’s climate financing processes, thereby improving the livelihoods and quality of life of our citizens through the Sustainable Development Agenda.”
“Mobilizing resources for climate mitigation and adaptation in Tanzania will require strong support from the private sector. CRDB Bank is a strategic partner for IFC, and the bond is critical to increasing access to local currency financing for businesses seeking to drive Tanzania’s green and inclusive growth,” said Amena Arif, IFC Country Manager for Tanzania.
Tanzania requires an estimated $19.2 billion in financing to meet its climate targets by 2030. Currently, most of the country’s climate financing comes from donors, although the private sector is becoming an increasingly important source of financing.
Green bonds continue to be the largest segment of the sustainable bond market globally and have made-up 63 percent of the issuance volume to date in 2023.
Expanding access to finance for Africa’s inclusive transition to low-carbon and resilient economic growth is a priority for IFC. In the last financial year ending June 30, 2023, IFC committed a record $14.4 billion in climate finance globally, mobilizing $6.8 billion of additional capital alongside our own investment of $7.6 billion to help client countries address the climate crisis. IFC’s climate commitments in Africa included $1.51 billion in own-account investments and a further $1.18 billion in mobilization.