Africa's 'green' rules on the rise
As the global fight against climate change gathers pace, more financial market regulators in Africa are introducing environmental disclosure policies.
**By Conrad Onyango, bird story agency**
The list of African countries introducing financial market policies related to environmental, social or governance (ESG) issues is growing, amid a global push for sustainable investing.
17 countries on the continent now have sustainability-focused policies, after another five joined the growing list in just the last 12 months, according to the latest joint report by the think-tank, Official Monetary and Financial Institutions Forum (OMFIF) and Absa Bank.
“Countries are working hard to ensure that they are well placed to attract the sort of global capital that is focused on long-term sustainability,” said Arrie Rautenbach Chief Executive Officer, Absa Group.
Launch of a strategic five-year plan that includes a provision encouraging the promotion of a ‘sustainable financial system’ in Uganda and the requirement by the Namibian Stock Exchange for companies to set up social, ethics and sustainability committees have been listed among key developments in entrenching green rules on the continent.
In early October, Namibia’s Government Institutions Pension Fund launched its ‘responsible investment’ policy to facilitate the integration and implementation of environmental, social, and corporate governance (ESG) into all aspects of the fund's investment activities.
In July, the Bank of Uganda launched a strategic plan for 2022-27 citing the promotion of a sustainable financial system among its key goals.
Uganda’s Central bank Deputy Governor, Michael Atingi-Ego, cited among others, “Our SP 2022 - 2027 includes a progressive approach to emerging issues such as central bank digital currencies; sustainability of the financial system; climatic risk.”
Egypt, Kenya, Mauritius and South Africa top the report's sustainability policy rankings, with commercial lenders in these countries required to incorporate climate change into their risk profiling.
Africa's 'green' rules on the rise [Graphics:Hope Mukami]
In Kenya, lenders have started reporting on environmental responsibility disclosures, with Kenya Commercial Bank, a top-tier lender, saying it has cut its carbon footprint by 11.25 per cent in its premises across the six countries.
In its Sustainability report dubbed, Progressive Action for Sustainable Development, covering Kenya, Tanzania, South Sudan, Uganda, Rwanda and Burundi, reported screening loans worth over US $2.8 billion (Ksh 336 billion) for social and environmental risks while increasing its green portfolio in the past two years.
In the last 12 months, however, Namibia, Uganda and Kenya have been among the countries that significantly increased their scores attributed to their progressive nature in implementing green rules.
“They have bolstered their environmental, social and governance market frameworks and, in Kenya, climate risks have been incorporated into financial stability regulation,” outlined the report.
Nine countries- Mauritius, South Africa, Ghana, Kenya, Namibia, Nigeria, Egypt, Tanzania and Morocco now offer sustainable financial products including green bonds.
For the first time since the index was launched in 2017, countries have begun doubling their overall scores with 19 seeing their performance lifted even in difficult operating environments, affirming the growing attractiveness of sustainable financing to investors.
The authors of the report have linked the improved country rankings to a sustained focus on fostering a financial market ecosystem, better placed to meet Africa’s financing needs.
“This was largely due to broad-based progress in developing sustainable financial markets, which is becoming increasingly important to global investors,” said the report.
Financial markets in Africa have faced disruption from the pandemic and before that faded, spillovers of the Russia-Ukraine war and tighter global financial conditions dampened their growth prospects.
**bird story agency**