With Zimbabwe’s agro-based economy facing an uncertain future due to climate change and a slow transition towards climate resilient agricultural production due to funding problems, the country is turning to its stock markets to promote investments into environmentally sustainable means of production.
According to the 2019 World Bank report-Public Expenditure Review (PER) with focus on agriculture, – without climate-smart agriculture investments, Zimbabwe’s staple crop, maize is expected to see a 33 percent yield reduction by 2030.
In 2019 the Zimbabwe Stock Exchange (ZSE) embarked on a stakeholder consultation for the introduction of Green and Social Bonds on the local bourse with a vision to raise funds for clean, sustainable projects.
A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet.
“The use of proceeds for green bonds shall be aimed at addressing key areas of environmental and climate matters including but not limited to climate change adaptation, clean transportation, green buildings, sustainable waste management, natural resources, energy efficiencies,” said ZSE chief executive Justin Bgoni.
The COVID-19 pandemic slowed progress in the formulation of this instruments but it however got huge boost when the idea was also embraced at a sub-regional levels last year at the Committee of SADC Stock Exchanges (CoSSE) meeting.
“On the agenda for this meeting were several discussion points germane to the progressive development of the capital markets of the SADC region, chief among them being funding commitments for projects focused on enhancing financial integration and developing the regional green bond market,” said CoSSE chairman and Botswana Stock Exchange chief executive officer (CEO) Mr Thapelo Tsheole.
Already there is a SADC Green Bond Programme partnership between CoSSE and FSD Africa, previously announced on the 11th of March 2021.
Widely criticized for offering a limited investment products which are mainly in company stocks, the ZSE has in recent years the green bonds have receive widespread approval from environmentalists as a step in the right direction.
Stock markets are increasingly gaining popularity in Zimbabwe particularly with the introduction of mobile applications for trading such as C-trade and ZSE Direct which has brought more retail investors to the capital markets in the past year to complement institutional investors.
This has improved ZSE capacity to create capital.
On ZSE Direct (an online trading platform run by the ZSE) the growth in retail investor participation on the stock market has been phenomenal.
The platform, which was launched in September 2021 and closed the same year with 3 149 total users, has since grown to 9 121 total users beginning of this year.
