Kenya Plans $772 Million Green Bonds to Boost Agriculture Output

(Bloomberg) -- Kenya plans 100 billion shillings ($772 million) of green bonds to boost agricultural production, climate resilience and competitiveness.

The National Treasury will issue the agri-bonds by the end of next year for sustainable projects like solar-powered cold chains, regenerative farming, parametric insurance and climate adaptation, according to the Agriculture Ministry’s website.

The East African nation will leverage carbon credit revenues to back the bonds and target institutional investors and diaspora funds. Maturities will range between five to 10 years at interest rates of 4% to 6%.

Agriculture, the mainstay of Kenya’s economy, makes up more than a fifth of output and employs over 60% of the population, especially in rural areas.

Despite its key role, public investment in the sector has historically been insufficient, averaging only 2.8% of the national budget, below the 10% threshold agreed by African nations, according to the ministry.

Kenya is now mobilizing private capital to bridge the agricultural funding shortfall of about 300 billion shillings “stemming from conservative public budget forecasts and unconfirmed donor pledges.”

“The low level of public investment in the agri-food system has kept challenges alive, including low productivity, vulnerability to climate shocks, and limited market access, especially for small-holder farmers, who make up most producers,” it said.

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