NAIROBI, Jan. 15 (Xinhua) -- Kenya on Monday ratified a framework for the issuance of sovereign green bonds as it seems an innovative way of climate financing.
The Cabinet, led by President William Ruto, said in a dispatch released in the capital of Nairobi that the Sovereign Green Bond Framework seeks to ensure alternative funding options for green and resilient investments amid increasing climate change costs.
"The green bond framework is a financial instrument to raise funds for climate action, promoting a nexus between climate initiatives and economic development," the Cabinet said.
The Cabinet added that it recognizes the potential of green bonds in mobilizing resources for climate-resilient infrastructure, food and water security, and deployment of green technologies.
The framework lays out a structure on how the funds raised from green bonds are used, including the procedure of project selection and evaluation, management of the funds, and reporting progress.
"Green bonds offer an increasingly attractive mechanism for Kenya to tap into institutional investors and allocate capital to finance green, low carbon and climate-resilient investment projects for green and inclusive growth," the framework notes.
Kenya was hit harder last year by the severe effects of climate change, which include drought and El Nino rains that were months apart.
More than 4 million Kenyans were affected by the drought, while nearly 200 people died, and thousands more were displaced by floods caused by El Nino rains.
According to Kenya's National Treasury, frequent droughts have had the greatest economic impact on the country, on average causing a 0.6 percentage point decline in the growth of gross domestic product. ■
