The development is a triumph for the BSE, which has been advocating for sustainability issuances and last year offered a 25% discount on listing fees for issuers.
By listing its note programme, Absa Bank Botswana is now in a position to regularly float bonds up to an aggregate of P2 billion. Documents filed with the BSE show that the bonds will be used for green, social, and sustainability bonds, fixed-income debt instruments designed to finance environmental or social impact projects.
Absa Bank Botswana treasurer, Salma Baduel, told BusinessWeek the new programme was part of the bank’s ambition to become the country’s leader in sustainable finance, a target built on the development of its Environment, Social and Governance (ESG) strategy last year.
“Our strategy was developed in line with Botswana’s commitments as per the National Determined Contributions,” she said in an emailed response to enquiries. “Issuing a programme memo that caters for ESG instruments and publishing the first sustainable finance issuance framework will enable us to offer ESG debt instruments to our clients. “As a financial institution, it is imperative for us to assist our clients to achieve their financial goals while making progress towards transiting to sustainable operations through providing targeted funding for green and social projects. “We believe that this will make a positive impact on the society.”
According to Absa’s ESG strategy, the bank wants to proactively incorporate climate change risk into its business, contribute meaningfully to the society in which it operates, provide inclusive financial services to SMEs women and youth and also support financial literacy, tertiary education, and vocational training, amongst others.
Despite containing some of the world’s most climate-vulnerable countries including many with the lowest electricity generation, Sub-Saharan Africa currently has less than one percent of the global green or sustainable bond issuance, or about $1.4 billion. Most of these issuances have come out of South Africa, the continent’s most sophisticated financial market.
The BSE, however, has been ramping up various initiatives to attract green bond listings, including becoming the third out of just four stock exchanges in Africa to have published ESG Disclosure Guidelines.
The local bourse has also been conducting capacity-building workshops in conjunction with local institutional investors and global partners and has also affiliated with global entities that advance the integration of ESG into investment processes.
Baduel explained that the note programme allows Absa Bank Botswana to issue debt instruments to a wide range of investors.
“However the specific bond issuances will be targeted to specialised investors due to the complexity of the instruments. “At the time of issuance, investors will be provided with a pricing supplement which contains the details of the issuances such as the minimum denomination. “The key consideration taken when determining the minimum denomination is the ease of trading and development of the secondary bond market,” she said.
The BSE views green bonds as a key financing tool for the country’s sustainable development aspirations, particularly as local and global investor interest in these types of instruments continues at elevated levels.
