CoSSE Invests in Developing The SADC Green Finance Market

By | Uncategorized
image-1.png

Across Africa, sustainable development has gained momentum, and capital markets are positioned to drive the agenda. At a regional level, CoSSE is excited to have the opportunity to work with FSD Africa on accelerating the take-up of green bonds to finance sustainable green projects in the SADC region.

To address the climate crisis, multilateral organisations have emerged to expedite the attainment of a green and sustainable future through concerted initiatives. Prominent coalitions include the Paris Agreement Treaty, the United Nations Sustainable Development Goals (UN SDGs), and the Sustainable Stock Exchanges (SSE) Initiative. Of the 14 Exchanges in CoSSE, seven are partners of the SSE Initiative, namely Stock Exchanges of Botswana (BSE), Dar es Salaam (DSE), Johannesburg (JSE), Mauritius (SEM), Namibia (NSX), Seychelles (MERJ) and Zimbabwe (ZSE). That being so, these Exchanges committed to the following statement:

“We voluntarily commit, through dialogue with investors, companies and regulators, to promoting long-term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on our exchange.”

Furthermore, the BSE, DSE, NSX and SEM are signatories of the Marrakesh Pledge, which is a continental coalition dedicated to fostering green finance in Africa and enabling an effective shift towards a low carbon economy.

According to research, out of all the regions, Africa is the most vulnerable and will be the most severely affected by the deleterious impacts of climate change. This is due to the climatic challenges connected to the geographical position of the continent, as well as weak infrastructures and their lack of capacity to effectively combat climate change while equipping populations with resilient mitigation strategies.

The United Nations Environment Programme (UNEP) indicates that by 2020, between 75 and 250 million people on the continent are to encounter water shortages due to increasing temperatures. The UNEP further projects that Africa’s annual GDP will decline by 2 percent to 4 percent due to climate change by 2040. The increased occurrence of reduced yields in rain-fed agriculture, droughts, heatwaves and flash floods in the SADC region are empirical evidence of global warming and a call-to-action.

To be a part of the solution, SADC Stock Exchanges are investing in the mainstreaming of green financial markets through the SADC Green Finance Programme. The main benefits of a functioning green bond market include;

  • attracting new listings;
  • satisfying environmental, social and governance (ESG) requirements;
  • meeting a growing investor and issuer demand;
  • improving investor diversification;
  • enabling direct investment in social impact activities and;
  • bringing a competitive edge to the market.

Although the concept of green financing is relatively nascent in the region, SADC has the second-mover advantage of learning from the pioneers and adopting tried & tested models and policies with added improvements.

Green-finance markets in the continent are more active in what are said to be Africa’s economic hubs, namely South Africa, Nigeria and Kenya. Several green bond issuances have occurred in these respective economies over the years, with the largest sale in the continent of USD200 million coming from the JSE in South Africa, in 2020. The burgeoning of green financing across the continent depends on the implementation of several components, of which the SADC Green Bond Programme aims to facilitate.

Chief among these is the regulatory component which will facilitate the establishment of a robust legal and regulatory framework to enforce transparency and compliance from issuers. Component 2 focuses on developing a pipeline of issuances for both sovereigns and corporates and demonstration transactions. Since listing a green bond will be a novelty for most issuers, the component makes a provision for specific guiding steps to support the issuers in developing green bond frameworks and facilitating verification and reporting processes.

The third component of the programme will support capacity building and market education to ensure wider uptake of green finance and, most importantly, to ensure that best practice for labelling green financial products is understood. The component will facilitate training and help organise workshops/ roundtables targeting potential issuers, investors and other relevant stakeholders.

The fourth and final component will facilitate the undertaking of a demand study to comprehensively gauge the demand for green bonds in the SADC region and understand the existing and estimated future investment potential.

As this programme gains traction, we are eager to reap quantifiable progress in the otherwise embryonic nature of the green bond market in SADC and Africa at large. The importance of the green bond market is to harness the significant role that financial markets can play in addressing the global climate change crisis. This is an opportune and critical time for SADC Stock Exchanges, particularly as governments start to pursue infrastructure development at a larger scale. Although green bonds are a relatively small slice of the global bond market, they are proving to be effective in improving companies’ environmental footprint, thereby potentially catalysing climate change.

About CoSSE

CoSSE which was formed in 1997 is a collective and cooperative body of the 14 stock exchanges in the Southern African Development Community (SADC) region. CoSSE is charged with the responsibility to accelerate the development of the SADC capital markets through cooperation and collaboration between SADC stock exchanges and other key SADC institutions and stakeholders. CoSSE Secretariat has close working relations with the SADC Secretariat, and SADC Structures such as the Committee of Central Bank of Governors (CCBG), Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA), the Committee of Ministers of Finance and Investment (CoMFI) and the Committee of Senior Treasury Officials (CoSTO).

For more information about CoSSE, visit the website at www.cosse.africa or contact the Secretariat via telephone at (+267) 3674421 or email at cossesecretariat@bse.co.bw

Programme Manager, SADC Region Green Bond Programme

By | Uncategorized

https://www.cosse.africa/wp-content/uploads/2021/06/020621-SADC-Green-Bond-Programme-Manager-ToR-1.pdf

The Committee of SADC Stock Exchanges (CoSSE) and FSD Africa are seeking to hire a Programme Manager to coordinate the activities of the SADC Green Bond Programme.

The Southern Africa Development Community region (SADC) Green Bond Programme aims to accelerate the take-up of green bonds as a tool for SADC member countries to tap into domestic and international capital markets to finance green projects and assets. The project will: support the development of listing guidelines and regulations for green bonds, support a pipeline of potential issuers, engage the institutional investment community, undertake training/capacity building of various stakeholders on climate finance.

The programme will build on existing goodwill and momentum that has led to issuances of green bonds in South Africa, Namibia, Seychelles and Mauritius to roll out a large-scale regional programme with coverage across the sixteen (16) SADC member countries.

For more information and details of how to submit, please download the full term of reference document.

Proposals should be sent by email to FSD Africa at bids@fsdafrica.org by 1200hrs EAT by 18 June 2021 under the subject line reading ‘Invitation to tender: Programme Manager for the SADC Green Bond Programme’.

Zimbabwe To List Bond On Stock Exchange For First Time In 20 Years

By | Uncategorized

ZIMBABWE plans to list a bond on the local exchange ZSE for the first time in 20 years. The funds are to finance the expansion and upgrade of a main highway that links the country to its largest trading partner, South Africa.

“The $250 million listing by the Infrastructure Development Bank of Zimbabwe will be the first note issuance on the Zimbabwe Stock Exchange since 2001, when municipal bonds with a government guarantee were listed, the bourse’s chief executive officer, Justin Bgoni, said on Thursday.

A listing date has not yet been confirmed. Thomas Zondo Sakala, chief executive officer and Willing Zvirevo, director at IDBZ didn’t immediately answer calls to their mobile phones seeking comment. In March, the lender said it will take three months to issue the infrastructure bond, as it canvasses for investor support.

“We are happy that government is considering using our market to raise capital to develop the country,” Bgoni said by text message. “Listing of government bonds is key for the development of a strong capital market. Government normally sets the pricing in the market.”

Total trade between South Africa and Zimbabwe stood at $2.4 billion last year. The 580-kilometer (363 mile) road that links the capital, Harare to Beitbridge, one of Africa’s busiest border crossings that straddles the two countries, is currently too narrow to deal with the vast amount of traffic.

On average about 25,000 people and 500 trucks pass through Beitbridge daily, according to Zimbabwean officials. The border point has been closed to non-commercial traffic since January to stop the spread of the coronavirus.

Source: https://www.african-markets.com/en/stock-markets/zse/zimbabwe-to-list-bond-on-stock-exchange-for-first-time-in-20-years

BSE Seeks To Increase Liquidity and Reverse Trend of Delistings

By | Uncategorized

Botswana’s stock exchange plans to introduce global depositary receipts (GDRs) and trading in short-term debt instruments to attract issuers and increase the market’s liquidity, CEO Thapelo Tsheole tells The Africa Report.

International companies want to be able to sell shares in Botswana, Tsheole says from Gaborone. GDRs, which are designed to let investors buy shares of foreign companies on their own domestic exchanges, will be available by mid-2022, he says, and it will be possible to trade short-term debt instruments by the end of this year.

The exchange has come under pressure from Botswana’s finance ministry, its majority owner, to accelerate new listings and halt the trend of companies leaving the bourse. Finance ministry permanent secretary Wilfred Mandlebe said in February that it was up to the exchange to ensure there was a “balance between the costs and benefits of listing”.

  • The market must reduce the time needed to settle share transactions, he adds.
  • Mandlebe points to the need for integrated depository to facilitate corporate and government bond trading. Government bonds are currently traded over the counter.

The Botswana market lags behind Namibia as well as South Africa in terms of capitalisation. Liquidity has become concentrated in a handful of companies.

  • In 2020, the shares of microfinance lender LetshegoFirst National Bank Botswana and brewery holding company Sechaba accounted for 47% of total equity turnover.
  • The concentration is getting worse. In January and February of this year, trading in those three companies made up 70% of turnover. Furnmart and Wilderness Safaris both delisted in 2019, and Afinitas shares will cease trading this month.

Paperless trades

Tsheole expects the new securities to increase the liquidity of the market, as happened in 2012 when Botswana introduced exchange-traded funds. Botswana, he argues, can benefit from its strong currency and the absence of foreign-exchange controls.

  • The exchange has a “strong pipeline” of new domestic equity listings including multinationals as well as local companies, Tsheole says.
  • The bourse is planning to make it easier to borrow and lend shares to facilitate short selling, he says.
  • The innovations will be made possible by a new central security depository system, designed to end reliance on paper certificates and scheduled to be in place by May.
  • Tsheole is also trying to persuade institutions to come and serve as market makers.
  • The exchange, which completed its demutualisation in 2018, plans its own stock market listing in Botswana within the next two years, Tsheole says.

Contact the BSE via email at info@bse.co.bw or call +267 3674400

CoSSE Holds 58th Bi-Annual Meeting, Virtually

By | Uncategorized

12 April 2021: The CoSSE Secretariat hosted the 58th Bi-Annual meeting for CoSSE members and observers, on the 8th of April 2021, chaired by the Chairman of CoSSE, and CEO of the BSE, Mr Thapelo Tsheole. This is the Committee’s second meeting to be held virtually since the COVID-19 outbreak.

On the agenda for this meeting were several discussion points germane to the progressive development of the capital markets of the SADC region, chief among them being funding commitments for projects focused on enhancing financial integration and developing the regional green bond market. Presentations were made by FSD Africa principals on the roadmap of the SADC Green Bond Programme partnership between CoSSE and FSD Africa, previously announced on the 11th of March 2021. Deliberations also concentrated on the implementation of the Support to Improving the Investment and Business Environment (SIBE) Programme spearheaded by the SADC Secretariat in conjunction with the European Union (EU). Progress updates of other associated SADC Sub-Structures pertaining to capital market issues were discussed, including Financial Inclusion, Cross-Border Trade between SADC Stock Exchanges and the IOSCO Objectives and Principles of Securities Regulation.


Mr. Tsheole noted the full attendance of CoSSE members at the virtual 58th CoSSE meeting as a clear demonstration of their commitment towards the development of the regional capital market. In his closing remarks, the Vice-Chairperson Mr. John Kamanga reiterated the importance of multilateral cooperation for the betterment of the SADC region and the African Continent as a whole, and urged all attendees to continue to adhere to their respective COVID-19 health protocols.

Green Bonds Toolkit For Africa

By | Uncategorized
Africa-Green-bonds-toolkit_EN

Climate change is one of the greatest challenges of our time, requiring far more capital than governments alone can provide. Private sources of finance are needed. Tapping into the international capital markets, as well as domestic capital, will be critical.

Green Bonds are one tool that can offer the African capital markets an opportunity to leverage private capital at scale towards building a more climate-resilient, greener economy. Green Bonds have been an effective financial instrument to moving institutional capital to priority economic sectors in the global economy, promoting the development of climate-resilient, low carbon infrastructure that allows for equitable and sustainable development. Globally the green bond market has grown tremendously in recent years, with issuances totalling USD257.7bn in 2019 (CBI, 2020).

This Green Bond Toolkit has been developed to provide the African capital markets with guidance on how to issue green bonds that are in line with international best practices and standards. The Toolkit provides a backdrop to the development of the market and features successful examples of green bond issuances that have emerged out of Africa – such as Acorn Holdings in Kenya and Access Bank in Nigeria.