National Treasury and Economic Planning Cabinet Secretary Prof. Njuguna Ndung’u. PHOTO | Courtesy

National Treasury and Economic Planning Cabinet Secretary Prof. Njuguna Ndung’u is proposing to establish an exclusive bank that will handle green projects investments in the country.

Under the draft Green Fiscal Incentives Policy, Treasury says the bank will be responsible for developing credit guarantee instruments and schemes to enhance access to finance for green investments from funds mobilized from various sources.

According to the Green Economy Strategy and Implementation Plan (GESIP, 2016- 2030), Kenya needs at least Ksh 2.4 trillion to implement green projects in the country by 2030.

“The policy seeks to identify and prioritize the implementation of a coherent suite of green fiscal reforms that will allow the country to exploit the opportunities of continuing a low emission development path while enhancing climate resilience and environmental sustainability,” said Ndung’u.

The bank is expected to derisk investments in the sector and supplement exchequer investment in priority projects as Kenya targets to cut greenhouse emissions by at least 32pc within the next seven years.

Climate funding in Kenya though developing still faces financial backing due to their perceived risky nature. In 2018 for instance, the banking sector provided climate financing to the tune of Ksh 27 billion which went to among others, went to  lending to renewable energy projects, provision of credit lines for energy efficiency and wastewater management.

Should the policy be adopted, Treasury say the bank could also offer support and expertise to financing recipients and provide incentives to develop innovative financial instruments such as green bonds, blue bonds, resilience bonds and transactions using carbon credits.

“Considerations include which sectors it might focus on, the extent to which it might provide concessional versus market-priced capital, the products it might provide, and its appropriate institutional home and governance arrangements,” the policy states.

The government also targets to set up the Green Investment Register (GIR) which acts as a database of green investments in the country.

The database which will be accessible to investors and as the bank embarks on intensive resource mobilization will contain national priority projects in the green sector, flagship green projects and green public–private partnerships.

Sectors targeted for investment through the bank include health and sanitation, agriculture, food and nutrition, forestry and wildlife, infrastructure, transport, manufacturing, electricity and clean cooking 

Public comments on the policy should be forwarded to the National Treasury before Tuesday March 2, 2023.

The Global Green Growth Institute

Treasury is also seeking public input on the accession to  the Agreement on the Establishment of the Global Green Growth Institute (GGGI) to help the country among others, bridge the gap between finance and projects through development of bankable projects.

Treasury expects the accession to the international inter-governmental treaty to enable the country tap into green investments in key areas of Waste, Solar Energy, Sustainable Transport, Green Buildings and Industry, Forest (Sustainable) Landscapes, and Gender and Inclusive Development.

GGGI which currently has 43 members was established in 2012 in order to drive green growth through supporting and promoting strong, inclusive and sustainable economic growth in developing countries and emerging economies.

The GGGI African Program currently has 40 projects in implementation with green investment Project Portfolio of  $1.87 billion in capital cost requirement.

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