ALCB Fund anchors Tanga UWASA’s debut green bond, the first ever sub-national bond issued in East Africa.

24 May 2024 –The ALCB Fund has invested TZS 19.1 billion (USD 7.4 million) in Tanga Urban Water Supply and Sanitation Authority’s (Tanga UWASA) 10-year green bond, The ALCB Fund’s investment represented c.35% of the total issuance amount of TZS 53.12 billion (USD 20.6 million), ensuring a successful issuance which was 103% oversubscribed. Proceeds of the transaction will be applied towards capital expenditure to improve production efficiencies, whilst addressing the growing demand for water and sanitation services in the Tanga region of Tanzania. The bond has impact indicators that align with the UN Sustainable Development Goals (SDGs) and has been listed on the Dar Es Salaam Stock Exchange (DSE).

The UN Capital Development Fund (UNCDF) provided technical and financial support to Tanga, while the Financial Sector Deepening Africa (FSD Africa)supported the development of the green bond framework and provided technical assistance for the Second Party Opinion (SPO), obtained from ISS Corporate Solutions. The ALCB Fund also played a critical role in assessing the company’s environmental & social practices, through the appointment of a third party consultant, and conducted an extensive legal review to improve the quality of transaction documents to the benefit of all investors.

This investment reinforces the ALCB Fund’s continued efforts to develop the thematic bond market in Africa, as part of its wider capital market development mandate. InQ4 2023, the Fund invested USD 25 million across four thematic bonds, including TZS15 billion (USD 6 million) in the first green bond issued in Tanzania, through its investment in Cooperative and Rural Development Bank (“CRDB”), USD 8million in the green bond issued by Copperbelt Energy Corporation Renewables(“CEC-R”), which was the first green bond used to develop renewable energy projects in Zambia, XOF 6 billion (USD 10 million) in the social securitisation issued by the Programme Electricité Pour Tous (“PEPT”) Fund, used to support electricity access for up to 800,000 low-income households in Cote d’Ivoire ,and TZS 2.5 billion (USD 1 million) in the sustainability bond issued by the National Microfinance Bank (“NMB”), to finance affordable housing and climate change adaptation projects in Tanzania.

Brock Hoback, Fund Lead of the ALCB Fund, said “the Fund is pleased to have supported the success of a first-time issuer, in line with its mandate to develop local capital markets. By anchoring the first green bond issued by a non-financial institution in Tanzania, we hope to encourage other similar transactions in East Africa. Financing of infrastructure projects through the local debt market remains uncommon in many African markets, and we are pleased to have played acritical role in the success of this transaction.”

Eng. Geofrey G.Hilly, Managing Director of Tanga UWASA said “we enthusiastically appreciate and acknowledge the catalytic role of the ALCB Fund. The Fund’s involvement in the transaction has improved the diversity and sustainability of funding sources for Tanga UWASA. This investment will help accelerate access to clean water for the Tanga community, enhance environmental conservation initiatives, and strengthen the development of our domestic capital market ecosystem, including the local currency bond market.”

Peter Malika, Head of United Nations Capital Development Fund (UNCDF) in Tanzania, said “ALCB participation came at the right time, their investment signalled confidence of international investors to the Tanzania market. UNCDF values your significant contribution to the transaction with such a high market development impact, and welcomes future collaboration opportunities as we look to support replication and scaleup in Tanzania and other emerging economies.”

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