IFC Backs Green Projects in Jordan
IFC has made a groundbreaking investment in Jordan's initial green bond, which will aid in financing eco-friendly initiatives throughout the country. This move aims to tackle increasing environmental issues and promote sustainable economic expansion.
The investment from IFC in Jordan's first green bond will amount to $50 million, and the bond has been issued by Jordan Kuwait Bank (JKB), a major private sector bank.
IFC's investment will consist of $36 million from its own account and a blended finance co-investment of $10 million from the Canada-IFC Blended Climate Finance Programme and $4 million from the Dutch-funded MENA Private Sector Development Facility, which are both overseen by IFC. The bond has a five-year term.
Jordan Kuwait Bank's inaugural green bond will adhere to the International Capital Market Association's green bond principles, which guide issuers on transparency and disclosure, ensuring full compliance.
The funds raised through the bond will be directed towards eco-friendly initiatives and assets, including sustainable water resources and waste management, new energy-efficient green buildings, low-carbon transport, renewable energy projects, and low-carbon vehicles.
In addition to its investment, IFC will also provide advisory services to help JKB improve its technical capabilities, enabling the bank to identify eligible projects and create a framework to evaluate and report on the impact of its green investments.
"We are introducing a new asset class to the Jordanian capital market that is designed towards building an environmentally sustainable and responsible banking industry. This partnership with IFC supports JKB's strategy in advancing its positioning and adaptability to the correct and potential demand for sustainable financing by providing innovative financing solutions in the Jordanian market. This significant initiative further aligns with Jordan's Economic Modernisation Vision in which sustainability is a cornerstone of this vision," said Haethum Buttikhi, CEO of Jordan Kuwait Bank.
Jordan is one of the countries with the most significant water stress globally and is grappling with severe climate change risks. These risks are amplified by irregular rainfall patterns, rising temperatures, and an influx of refugees that has driven population growth. Although the country is experiencing these challenges, green and climate finance remain underdeveloped in Jordan, and there is currently no green bond market.
"Mobilising private sector financing and exploring innovative financing options for climate mitigation and resilience projects are crucial to addressing the drivers and impacts of climate change," said Khawaja Aftab Ahmed, IFC Regional Director for the Middle East, Pakistan, and Afghanistan. "We hope this first green bond will not only promote climate-smart, sustainable projects in Jordan but also set the standard for green bonds in the market and encourage others to follow suit."
Based on the World Bank Group's Country Climate and Development Report, Jordan requires $9.5 billion in investments to promote a greener economy and achieve low-carbon development. A majority of this amount, roughly 60 per cent, must come from the private sector.
IFC has been involved in Jordan's private sector growth for 50 years and has invested over $2 billion in the country. IFC's involvement has enabled the completion of innovative initiatives such as the Project Pipeline Development Facility, which was the first of its kind in the region, the country's initial wind farms, and the Seven Sisters, which was the biggest renewable energy project in Jordan at the time.
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Source: IFC
