Tanzania’s NMB Bank PLC continues its success in pioneering impact investing in East Africa with a sustainability bond cross-listed on the London and Luxembourg stock exchanges. This follows a first gender-linked bond, also issued by NMB in 2022.
The funds raised through the new bond will go to companies that are combating the climate emergency, support inclusive growth and are assessed as “high-impact”.
The $73 million USD tranche of the NMB-Jamii Sustainability Bond was dual-listed on the London Stock Exchange on 13 May (“jamii” is kiSwahili for “community”). The LSE press release says it is “..a pioneering financial instrument designed to catalyze investment in projects that deliver tangible social and environmental benefits. The capital raised.. is aligned with global efforts to address pressing sustainability challenges and build a more resilient and inclusive society, empowering investors with the opportunity to generate financial returns while making a meaningful impact.”
Ruth Zaipuna, CEO of NMB Bank Plc, said: “Today’s listing of the Jamii Bond cements NMB Bank’s position as a trailblazer in sustainability within the African capital markets and we are humbled that our commitment to ESG principles has garnered national and international recognition.
“This extraordinary success highlights the strong confidence Tanzanian and global investors have in NMB Bank’s soundness and commitment to sustainability across operations, business, community, and environment. It reaffirms our creditworthiness and reflects the desire of investors, both local and international, to seize the safe and impactful investment opportunities within Tanzania’s robust investment climate.”
Tanzania’s drive to attract
Both TZS and USD tranches were listed on the Dar es Salaam Stock Exchange on 12 December 2023, according to this report in Daily News. It supports President Samia Suluhu Hassan’s drive to attract social and environmental investments into the country as a way to help climate change mitigation.
It raised a total of TZS 400 billion ($159m) from both local and international investors in its initial offering. Ms Zaipuna said the three-year sustainability bond attained phenomenal success: “The collective amount received from NMB Jamii Bond is more than three times the amount that was earlier approved by the Capital Markets and Securities Authorities (CMSA).”
The TZS tranche mobilized TZS 212.9bn compared to the initial target of TZS 75bn (284% subscription level) and the USD tranche raised $73m compared to an initial target of $10m (730%).
The USD tranche was also listed on the Luxembourg Green Exchange (LGX) of the Luxembourg Stock Exchange on 26 April. Julie Becker, CEO of LuxSE, said in a press release: “Mobilizing financing for sustainable development in Africa has become a key priority for our exchange. We are delighted to mark this landmark sustainability bond listing with NMB, and we are committed to continuing in our shared mission of fostering sustainable finance in the region and contributing to closing the funding gap.”
Jasiri gender bond in 2022
NMB Bank’s Jasiri (“brave”) gender bond was the pioneering bank’s inaugural social bond issuance and raised the equivalent of $32m. The LuxSE celebrated International Women’s Day by marking the admission of the Jasiri bond on LuxSE and LGX on 8 March 2023.
According to a LuxSE press release: “The bond made history as the first ever gender bond issued in Sub-Saharan Africa, and the proceeds of the bond provided nearly 3,000 women in Tanzania with access to the financing necessary to start or grow their own business.”
FSD Africa, the flagship development finance programme funded by the UK Government, provides some great background on the bond and its impact.
Investors in the Jamii bond
British International Investment, the UK’s development finance institution, and the International Finance Corporation were co-anchor investors in the TZS tranche of the NMB Jamii Bond and BII committed $15m equivalent in TZS. In 2023, BII has invested $1.3bn into African businesses and is committed to ensuring that 30% of its total commitments are in climate finance over 2022-2026. It has assets of over £8.1bn, and investments in 1,470 businesses across 65 countries.
FMO of the Netherlands was also an investor, alongside 5,600 local investors in Tanzania. The issue was over-subscribed.
FSD Africa provided technical assistance for NMB Bank’s Portfolio Review assessed by the not-for-profit Climate Bonds Initiative (CBI) for alignment with Sustainability Bond Guidelines of the International Capital Markets Association (ICMA) and other frameworks including Multilateral Development Bank (MDB) principles and the EU & CBI Taxonomies. It also offered technical assistance towards securing Second Party Opinion (SPO) for NMB Bank’s Sustainable Finance Framework, which was published in August 2023.
FSD Africa works in over 30 African countries to mobilize “green plus” finance to power economic and social development while delivering environmental gains and building resilience. Services include policy and regulatory reform, capacity-strengthening, improving financial infrastructure and addressing systemic challenges in Africa’s financial markets to spark large-scale and long-term change.
A report by the Climate Policy Initiative estimates that Africa needs $277bn every year to implement its climate plans and meet 2030 climate goals. From 2019 to 2020, private sector financing represented only 14%.
