On 30 June 2025, the Luxembourg Stock Exchange (LuxSE) rang the bell for the listing of Tanzania’s first green bond. The Kijani Bond – kijani meaning ‘green’ in Swahili – made headlines for connecting green projects in Africa with institutional investors in Europe and beyond. More specifically, the bond will raise finance for projects in climate-smart agriculture, clean cooking energy, green buildings and transport systems in Tanzania.

Two years before its LuxSE listing, the Kijani Bond had been listed on the Dar es Salaam Stock Exchange. Luxembourg was chosen for the secondary listing because it hosts the world’s leading platform for sustainable finance and international debt securities. As part of its LuxSE listing, Tanzania’s green bond is also displayed on the Luxembourg Green Exchange (LGX), which enhances its visibility to global ESG investors and ensures transparency through use-of-proceeds reporting.

‘This listing represents more than the culmination of a financial transaction; it marks a new chapter of partnership between Africa and Europe in financing the green transition,’ said Abdulmajid Mussa Nsekela, group CEO of CRDB Bank, which issued the Kijani Bond. ‘We are proud to be pioneers in this space, raising the equivalent of US$65.7 million through our first green bond, which was oversubscribed by 429%,’ he said at the Ringing the Bell ceremony. ‘Today we take our sustainability journey global, not just to raise funds, but to raise the bar. This is a message to the world: Africa is ready to lead in sustainable finance with innovation, integrity and ambition.’

This dual listing reflects a trend among African issuers that mobilise domestic capital first, then scale globally through reputable ESG platforms such as the LuxSE/LGX and the London Stock Exchange (LSE). Most of these bonds are sovereign or sovereign-backed, but private issuers – like CRDB (Kijani Bond) and Kenya’s Acorn Green Fund (for green student housing, listed on the Nairobi Securities Exchange and the LSE) – are gaining traction, according to the 2025 Green Bond Report by FSD Africa, a specialist development agency based in Nairobi, Kenya.

So where does Africa stand globally in terms of sustainable investing: are we still laying the foundations or already scaling innovations? ‘It’s difficult to generalise Africa as a single homogeneous region,’ says Loshni Naidoo, chief sustainability officer at the Johannesburg Stock Exchange (JSE). ‘However, I think the continent is transitioning from foundational to scaling, especially in certain regions. In addition to South Africa, countries such as Kenya, Rwanda, Morocco, Ghana, Botswana, Egypt, Namibia, Madagascar, to name a few, have demonstrated significant progress in sustainable investing.’

Many African countries have laid out policy and institutional frameworks related to sustainable finance, she adds. ‘These countries are becoming, or have established themselves as, regional hubs or leaders in a specific sector. For example, BRED Madagasikara [a commercial bank in Madagascar] is responsible for the first sustainable bond in the Indian Ocean region. Accra is becoming a West African hub for sustainable start-ups. The banks (and other financial institutions) operating across the continent are expanding operations to respond to opportunities in renewable energy and sustainable finance,’ says Naidoo.

Yet, this progress is not without challenges, she says, citing examples such as regulatory fragmentation, limited ESG data and underdeveloped capital markets in some regions – alongside the usual concerns about investing on the continent, such as political instability, currency risk and governance issues.

‘Africa is at a lag to the global sustainable finance market, as evidenced by the small market size relative to the rest of the globe,’ says Nigel Beck, head of sustainable finance and ESG advisory at Rand Merchant Bank (RMB). ‘In 2024, the global sustainable finance market was valued at US$1.6 trillion, compared to US$4.6 billion in South Africa – indicating that there’s significant room for growth locally, given the appetite for sustainable investments.’

Even though Africa’s sustainable finance market has grown at a steady 27% compound annual growth rate over the past 11 years, it remains nascent in the global landscape, says Beck. Last year, Africa contributed less than 1% to the global sustainable finance market, highlighting a major untapped opportunity.

Green bonds in particular are a promising instrument for channelling more sustainable financing to the continent. While they are structured like conventional bonds, their strength lies in how the proceeds are used: they are issued to finance projects with ‘green’ benefits, such as renewable energy and sustainable infrastructure.

‘In South Africa, green bonds are contributing to the financing of the Just Energy Transition by funding large-scale renewable energy projects and supporting companies’ transition plans,’ says the JSE’s Naidoo. ‘They can also finance innovation, such as solar micro-grids, which are scalable solutions that are potentially better responses for rapid infrastructure development.’ As a co-benefit, she says green bonds can also assist in job creation, for example, when investments in renewable energy projects lead to employment opportunities or community inclusion.

In fact, FSD Africa’s 2025 Green Bond Report highlights that green bonds are not only financing climate-related projects but also promoting social inclusion and strengthening capital markets. Take, for example, Absa’s latest green bonds. In July 2024, the bank listed three green bonds (ABGN04, ABGN05 and ABGN06) on the JSE. Their total value is ZAR3.27 billion across the three tranches, which will mature in three, five and seven years, respectively. The proceeds will finance solar and wind renewable energy projects, thereby promoting social inclusion through job creation and energy equity (by expanding access to clean energy, especially in underserved areas). Absa’s green bonds strengthen capital markets because their listing on the JSE’s Sustainability Segment enhances visibility and liquidity for ESG instruments in Africa, and potentially encourages further issuance and investor participation.

The green bonds that RMB has arranged in South Africa have similar climate, social and financial benefits. Worth more than ZAR15 billion, they focus on renewable energy and green buildings. Outside South Africa, the RMB team has arranged green bonds in Namibia and Nigeria, and according to Beck, also pioneered multiple market firsts, such as the Development Bank of Rwanda’s sustainability-linked bond, as well as Letshego Namibia’s social bond.

‘There’s a growing urgency to address Africa’s vulnerability to climate change, as well as its inherent social issues,’ he says. ‘Sustainable finance has an important role in building climate resilience and delivering social impact.’ Africa faces significant climate and infrastructure financing needs, with an estimated US$200 billion required annually to meet Paris Agreement targets and an additional US$170 billion for infrastructure.

However, Africa is beginning to catch up globally. ‘Rwanda and Kenya have issued green finance taxonomies, which is expected to catalyse the market due to improved clarity for issuers and investors,’ says Beck. ‘Similarly, sovereigns on the continent have established sustainable finance frameworks, with an expected catalytic effect from issuances on the back of these frameworks.’

Ghana, for example, has laid the groundwork with new green bond guidelines but has yet to issue its first green bond. Namibia is building momentum with a supportive ecosystem and its first green bond – issued in 2018 by Bank Windhoek – with the proceeds going into renewable energy, sustainable agriculture and biodiversity. In 2022, two more green bonds followed: by Standard Bank Namibia (for solar and wind energy projects) and FNB Namibia, arranged by RMB (for green buildings, renewable energy).

But sustainable finance also includes the oceans. ‘Blue’ bonds are emerging as a subset of green bonds, but with a marine or ocean-specific focus. They are increasingly vital for protecting marine ecosystems and biodiversity, creating jobs and unlocking climate finance for ‘blue’ (ocean-based) economies. The Seychelles government listed the world’s first blue bond in 2018, raising US$15 million for sustainable fisheries and marine conservation.

In 2023, Gabon issued a blue bond to refinance its Eurobond debt, intending to use the proceeds for sustainable fisheries, marine conservation (eg, protect endangered species such as humpback whales and sawfish), as well as carbon sequestration (eg, through mangroves and seagrass beds). In 2024, Africa’s first corporate blue bond was listed on the Namibian Stock Exchange by Kelp Blue, a Dutch oceanic aquaculture company with operations in Lüderitz, Namibia. The bond is used for large-scale kelp forest cultivation for carbon sequestration, marine biodiversity and sustainable bioproducts.

For the issuers, these blue and green bonds present an opportunity to link their debt fundraising efforts with their sustainability objectives in a tangible way. As the issuers align their economic activities with sustainable finance frameworks, they often attract more investors and tap into previously untapped capital sources. Meanwhile, investors seek out sustainable finance instruments, such as green bonds, for the financial benefits and positive environmental impacts, combining sustainability with profitability. Green bonds can also boost an investor’s green credentials and help them achieve their sustainability targets.

‘Sustainable investing done properly – where the credibility can be consistently demonstrated through rigorous reporting and transparent impact measurement – will boost investor confidence,’ says Naidoo. Essentially, she sees this as a way to attract international capital that may have previously been hesitant to participate or invest in emerging markets in Africa.

By Silke Colquhoun
Images: Gallo/Getty Images, iStock