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Fiji Issues First Developing Country Green Bond, Raising $50 Million for Climate Resilience

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Fiji has become the first emerging market to issue a sovereign green bond, raising 100 million Fijian dollars, or US$50 million, to support climate change mitigation and adaption.

Home to over 870,000 people, Fiji’s 300 volcanic islands include low-lying atolls that are highly susceptible to cyclones and floods. In 2016, Tropical Cyclone Winston—the most intense tropical cyclone in the Southern Hemisphere on record—passed directly over Fiji, causing economic losses that amounted to almost one third of the country’s GDP. Like all Pacific island states, Fiji is also highly vulnerable to the impact of climate change: close to 20 percent of the region’s 10 million people could be displaced due to climate change by 2050.

Green bonds are fixed income, liquid financial instruments that are used to raise funds dedicated to climate-mitigation, adaptation, and other environment-friendly projects. This provides investors an attractive investment proposition as well as an opportunity to support environmentally sound projects.

At the request of Fiji’s Reserve Bank, the World Bank and the International Finance Corporation (IFC), a member of the World Bank Group focusing on private sector, provided technical assistance to assist the government in issuing a sovereign green bond. This collaboration took place under a broader, three-year Capital Markets Development Project supported by the Australian Government. Through this partnership, Australia and IFC are helping stimulate private sector investment, promote sustainable economic growth and reduce poverty in the Pacific.

Projects financed from the Fiji green bond will follow the internationally developed Green Bond Principles, and will focus primarily on investments that build resilience against the impacts of climate change. Sustainalytics US (Sustainalytics), a provider of environmental, social and governance research and analysis, evaluated Fiji Sovereign’s green bond transaction and its alignment with the Green Bond Principles. Fiji will also use bond proceeds for projects supporting its commitment to achieve 100% renewable energy and reduce its CO2 emissions in the energy sector by 30% by 2030.

Fijian Prime Minister and President of COP23 Frank Bainimarama said: “The Fijian people, along with every Pacific Islander, live on the front lines of climate change. The rising seas, changing weather patterns and severe weather events are threatening our development, our security and the Fijian way of life, along with the very existence of some of our low-lying neighbors. I have made access to climate finance a key pillar of our upcoming COP23 Presidency, and we are proud to set an example to other climate-vulnerable nations by issuing this green bond to fund our work to boost climate resilience across Fiji. By issuing the first emerging country green bond , we are also sending a clear signal to other nations that we can be creative and innovative in mobilizing funds and create win-win outcomes for countries and investors in adapting to the serious effects of climate change.”

“With this bond, Fiji has demonstrated that green capital markets can be created in emerging economies, and that all countries, big and small, have an important role to play in facilitating climate solutions,” World Bank Group President Jim Yong Kim said. “As it takes the helm of COP23, Fiji is uniquely positioned to inspire other countries to meet their respective targets and build resilience against climate change.”

The World Bank and IFC are among the pioneers of the green bond market. The World Bank issued the first green bond in 2008. Since then, both institutions have provided leadership by issuing green bonds across a range of currencies, tenors and volumes; helping to define best practice for reporting and standards; and working with countries to facilitate the development of domestic green bond markets. The global green bond market is expected to reach US$134.9 billion in 2017.

The Government of Fiji will chair the 23rd Climate Change Conference (COP23) in Bonn, Germany from November 6-17, 2017. Prime Minister Voreqe Bainimarama has given high priority to COP23 and aims to continue the momentum for action since the entry into force of the Paris Climate Change Agreement last year.

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The “High 5s”: A strategic vision and results that are transforming Africa

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For the past ten years, Africa has recorded some of the world’s strongest rates of economic growth. At the same time, many African economies continue to function at well below their full potential. Structural transformation is needed to create more jobs, reduce poverty and accomplish sustainable development objectives.

The African Development Bank’s High 5 priority areas are intended to support African countries’ achievement of the SDGS. They are: Feed Africa; Light up Africa; Industrialise Africa; Integrate Africa; and Improve the Quality of Life for the  people of Africa. 

Atta Abdul, Fatima-Zahra, Shuaibu, and Daniel are the faces of a continent that is being transformed. By betting on Africa’s youth, the Bank is banking on the future to make the continent a land of progress, prosperity and hope.

Feed Africa

Since 2015, 74 million Africans have benefited from improved agricultural technologies through the Bank’s efforts to support increased food security on the continent.

In western Mauritania, for example, the Brakna-Ouest irrigation infrastructure improvement project, supported by the Bank in the amount of $12 million, enabled 1 500 farming and livestock-producing families to return to cultivating their fields. 

“We come from a farming and livestock-producing family and we grew up in that environment. Our harvest was very poor. We wanted to move somewhere else,” explains Atta Abdul Seck, a project beneficiary in Louboudou in western Mauritania. “As a farmer’s son,  what I liked most when I returned was being able to continue farming. Farming is in my blood,” he says proudly. 

Light up Africa

Without electricity, agriculture cannot effectively meet the growing challenge of food security in Africa. The Bank has made investment in energy a priority. Since 2016, it has mobilised $12 billion for its “Light Up Africa” strategic priority. Through this investment, 13.4 million people have gained access to electricity.

Morocco has made significant progress in widening access to electricity. In just the past twenty years, the electricity system has expanded to cover almost the entire country. The national rural electrification program, supported by the Bank with 155 million euros, has connected nearly 12.8 million Moroccans to the national power grid.

In Dar El Aïn, a village twenty kilometres from Marrakesh, the arrival of electricity has opened new doors for the women of the “Al Amal” cooperative. They use electricity to process their wheat into couscous or create other barley or wheat-based products. “The cooperative processes local crops into added-value products. Now, with electricity, the women are much more efficient, and their products are of better quality. It creates hope,” says Fatima-Zahra, a thirty-year-old member. 

Industrialise Africa

As part of the Bank’s “Industrialise Africa” priority, 9 million people have gained access to private financing. In Nigeria, for instance, where more than 70 percent of the population depends on agriculture, fluctuating harvests have significant repercussions on yields, income and food security. 

One solution is fertilizer, particularly if locally produced. The Bank provided $100 million to support construction of a modern fertilizer plant in Port Harcourt.

Shuaibu Yusuf, a farmer in his thirties who live near Port Harcourt, has experienced the impact of this project in his daily life. “When I used this fertilizer, I saw the difference. My harvest increased by more than 40 percent. I can feed myself, pay for my children’s education, and even their medical expenses,” he says. “I’m going to encourage my children, my neighbours and members of my community to increase their farming activities so we can all progress together,” Shuaibu continues.

Integrate Africa

To derive more benefit from industrialisation, Africa must become better integrated in terms of trade and markets. Through integration, African countries can gain access to larger markets and thereby increase incomes for millions of residents through new opportunities.

Since 2015, 69 million people have benefited from the Bank’s support for new transport infrastructure that has advanced integration. Gaps in the primary transport corridors have been filled, links between countries have been strengthened, and intra-African trade has been revitalised.

A good example of this is The Nairobi-Addis-Ababa corridor, which received$670 million in Bank financing and which has enhanced the potential for trade and job growth in Ethiopia and Kenya.

Daniel Yatta, a forty-year-old Kenyan lorry driver, has been transporting goods between Nairobi and Addis-Ababa for 15 years, and has seen the new road’s impact on his business. “ Back in the day, it would take more than two weeks to drive between Addis and Nairobi,” he says. The new road has made his life much easier. “With the new road, the trip takes only a few days. With 30 tonnes of freight, it only takes about 24 hours to drive to Addis!” he continues.

Improve the quality of life for the people of Africa

An important part of improving living conditions is providing better access to essential services such as health, water and sanitation. Since 2015, Bank-supported projects  have given 43 million people access to water and sanitation

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Local treasures: Nepal’s mountain crops drive biodiversity and economic growth

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Jungu village, Dolakha District. Photo by D. Gauchan, Bioversity International

Remote mountainous regions of Nepal are harsh places in which to survive and make a living.

Economic, social and environmental challenges include lack of market access, outmigration, dependency on imports and subsidies, women’s drudgery, malnutrition, unpredictable weather, pests and diseases.

To tackle some of these challenges, UNEP and partners are working with the local community to conserve biodiversity of crops, to boost food security and resilience.

The 2014-2020 Global Environment Facility-supported project was implemented by the United Nations Environment Programme (UNEP) and executed by Bioversity International in collaboration with national  partners—the Nepal Agricultural Research Council, the Department of Agriculture, and Local Initiatives for Biodiversity, Research and Development.

It covers eight sites, at altitudes ranging from 1,500 to 3,000 metres above sea level, in the districts of Humla, Jumla, Lamjung and Dolakha, in Western, Central and Eastern Nepal. High‑elevation agricultural systems often have high levels of environmental instability. Eight mountain crops – buckwheat, common bean, finger millet, foxtail millet, proso millet, grain amaranth, naked barley and cold tolerant high-altitude rice – are targeted.

The project faced two major hurdles in five years: devastating earthquakes in March and April 2015, which badly affected two of the four sites, as well as a major administrative reform which saw the introduction of a new federal system in 2017.

Despite the disruptions, government officials believe the project has made a difference. “The project has developed the foundation for promoting and mainstreaming traditional crops,” says Deepak Bhandari, Executive Director of the Nepal Agricultural Research Council. He also hailed the launching of the national project website.

“The project made us aware of the value of local crops,” says Depsara Upadhaya, a farmer from Chhipra village in the northwest of Nepal. “We received support to establish a community seedbank in the village, and electric machines were made available to process finger and proso millet. This brought great relief to women in my village by reducing the physical strain of manual threshing.”

Under the project, four community seed banks were established to conserve rare, local mountain crops. The banks now conserve 232 unique and endangered varieties of 56 crops. UNEP and partners also encouraged best practices for mainstreaming agrobiodiversity in agriculture through community biodiversity management funds, farmers’ field schools and seed exchanges.

Making a difference

“Crop biodiversity contributes to nature, which is an essential source of many drugs used in modern medicine. Globally, nearly half of the human population depends on natural resources for its livelihood,” says UNEP biodiversity expert Marieta Sakalian.

Since its inception in 2014, the project has been boosting mountain crop biodiversity for the benefit of local communities and farmers. Results include:

  • 20,000 households received seeds, germplasm and information on how to conserve and grow mountain crops.
  • 300 germplasms of eight target crops were sent to project sites for on-farm testing. Over 60 were selected for use by farmers.
  • 500 local crop genes have been stored in the national gene bank for future breeding.
  • In 2019, low-interest, collateral-free loans were given to 58 farmers – mostly women – by a community biodiversity trust fund.
  • Electric threshers for millet reduced women’s’ physical labor and improve efficiency. Finger millet threshers were distributed to over 500 households. Eight improved pieces of processing equipment were given to communities.
  • Capacity building of over 100 local farmers, many of them women
  • Over 70 publications—books, flyers, posters, blogs and brochures—were produced.

UN Environment

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ADB Approves $400 Million Loan to Support Philippines’ Capital Market Development

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The Asian Development Bank (ADB) has approved a $400 million policy-based loan to support the Philippine government’s efforts to strengthen domestic capital markets and reach its development goals of high, sustained economic growth and poverty reduction.

The Support to Capital Market-Generated Infrastructure Financing Program, subprogram 1, aims to address key constraints that have limited the growth of domestic capital markets, especially government and corporate bond markets. It also focuses on building a vibrant domestic institutional investor base that will become a sustainable source of long-tenor infrastructure finance. By boosting infrastructure finance, the capital market development program will support higher public infrastructure spending for years to come.

The government’s flagship “Build Build Build” (BBB) infrastructure development program targets an increase in public spending on infrastructure towards 7.0% of gross domestic product by 2022, up from 5.5% in 2018 and an average of 2.8% in the last three decades.

“Resilient and vibrant capital markets are key to achieving economic development, growth, and poverty reduction as set out in the government’s long term strategy AmBisyon Natin 2040,” said ADB Vice-President Ahmed M. Saeed. “By developing domestic capital markets, funds are generated to support higher levels of long-term investments and sustainable quality job creation. The program approved today will support the Philippine government’s development goals, including its response to the COVID-19 pandemic.”

The capital markets development program has supported various reforms in recent years, including the launch and implementation of the first government-led, comprehensive domestic bond market development plan. The Philippines also has modernized its government debt trading infrastructure and provided a reliable yield curve to support the pricing of private sector debt instruments.

Other reforms have helped build an enabling environment for private sector debt instruments. These reforms will boost outstanding corporate bonds to an estimated 12% of gross domestic product by 2021, up from 7.5% in 2017. The government also has upgraded the Personal Equity and Retirement Account system, which makes it easier for Filipinos to tap into the capital markets to save for the future.

This latest assistance builds on decades of ADB support to financial sector reforms in the Philippines, including strengthening governance and investor protection measures in the wake of the 1997 Asian financial crisis. Since 2013, ADB has been supporting reforms in the domestic capital market, which aimed to build a more diversified institutional investor base to encourage the development of long-term finance for infrastructure.

This new loan brings ADB’s total lending to the Philippines to $2.1 billion so far this year. ADB approved a $1.5 billion loan for the COVID-19 Active Response and Expenditure Support Program on 23 April and $200 million in additional financing for the Social Protection Support Project on 27 April.

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