FSD Africa and CDG Capital Support Africa's First $1 Billion Corporate Clean Mobility Green Bond

Published on: 30 July 2022
by KnowESG
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The first corporate clean mobility bond in Africa was launched by the national railway operator of Morocco (ONCF). FSD Africa offered technical support for this bond's green certification process.

With this offering, ONCF aims to raise about 1 billion dirhams ($95 million) to finance the Al Boraq project, which has resulted in significant community benefits in terms of connectivity, travel time, and frequency while lowering greenhouse gas emissions.

This high-speed line (Ligne à Grande Vitesse – LGV) project is part of a master plan to connect Tangier to Marrakech by 2030, promoting economic growth by delivering faster inter-urban passenger and freight lines with fewer carbon emissions. Through the LGV, the travel time between Tangier and Kenitra has been cut by 2 hours and 25 minutes, and over 2.9 million tonnes of carbon equivalent will be reduced over 30 years.

ONCF is fully committed to a socio-environmental policy, placing sustainable mobility at the core of its business strategy and development model by highlighting the ecological attributes inherent to the railway mode as a vector of sustainable mobility. 

ONCF has taken a bold step in its energy shift by running all Al Boraq trains on renewable wind energy as of January 1, 2022. ONCF is transitioning to green energy gradually, raising its green energy consumption to 50 per cent by 2023 and 100 per cent by 2030. Currently, green energy accounts for 25 per cent of the organisation's total energy consumption.

According to the International Energy Agency (IEA), rail is one of the most energy-efficient and least polluting forms of transportation, with only 0.3% of world emissions compared to 2% for aviation. While transportation accounts for a significant portion of green bond issuances globally (20% of all green bonds issued globally), in Africa, it is still grossly underrepresented (less than 1% of total issuances).

This initiative is an important illustration of how the use of a capital market instrument — a Green Bond — may address infrastructure issues and provide an environmentally responsible answer. FSD Africa views this project as one of the means to affect change and demonstrate the viability of the green bond labelling process to other potential issuers and investors.

Green bonds are one of the most accessible and cost-effective ways to acquire huge sums of funds for Africa's environmental goals. This project's prospective long-term anticipated market system adjustments will lead to a more sustainable future characterised by building economic resilience through more efficient and low-carbon passenger and freight transportation.

FSD Africa CEO, Mark Napier, said: 

"Climate Finance is an important focus area for FSD Africa. This project presents an opportunity for FSD Africa to support the issuance of Africa's first corporate clean mobility bond. The issuance of green bonds as a tool for unlocking significant capital for sustainability-related investment has been gaining traction in Africa in recent years. We look forward to supporting further green bond issuances".

Simon Martin, British Ambassador in Morocco said: 

"Morocco's capacity for financial innovation is powering a new era of post-covid economic growth that, with the right ingredients, can set the Kingdom on a truly sustainable development pathway. I'm incredibly proud that, through the work of organisations like FSD Africa and its partners, the British Government is helping support Morocco's journey to establish low carbon transport infrastructure through its national railway operator ONCF issuing Africa's first corporate clean mobility bond"

Source: Business Ghana

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