Keabetswe Pheko-Moshagane, Absa MD
‘2 big banks are at an advanced stage’
BSE positioned as a one-stop shop for sustainable finance
Absa an inspirational story, creates 208 jobs
The sustainability financing market in Botswana is gaining momentum, with two more banks expected to enter the market to raise sustainable finance, incentivised by listing discounts of up to 25%.
Absa Bank Botswana’s successful issuance has paved the way for further opportunities. At the same time, Stanbic Bank Botswana and First National Bank Botswana (FNBB) have been actively engaged in various sustainable financing initiatives.
“A few entities have indicated prospective issuances as well as restructuring of their Programme Memorandums to provide for issuances of Sustainable Bonds,” the Botswana Stock Exchange (BSE) said in a market report for September.
The exchange revealed that 2 big banks are at an advanced stage of coming to market to raise sustainable capital, as the creation rate of eligible assets has rapidly picked pace.
“The increased awareness and capacity building around the issuance of Sustainable Bonds is gradually translating into tangible results,” the BSE said in its report adding that this is a commendable development as listing entities will benefit from fee incentives on the BSE by way of a 25% discount on initial listing fees and annual sustaining fees.
Debt listing requirements were revised to introduce provisions for listing Sustainable Bonds, including Green bonds, Social Bonds, Sustainability Bonds and sustainability-linked bonds. New incentives for Environmental, Social, and Governance (ESG) asset issuance lifted Botswana’s score from 58 in 2022 to 59 in Absa’s African Financial Market Index 2023.
With some of the recent sustainable finance development initiatives, the BSE said it has now positioned itself as a one-stop-shop for sustainable finance, with services and products that extensively support ESG Investing, ESG Disclosures, ESG Ratings and a regulatory framework that is anchored on international best practice while sufficiently accommodating local market nuances.
Earlier on in the year, BSE requested the government to give tax incentives for green and sustainable bond issuances. The exchange called for more incentives from Government and other Government agencies, citing withholding tax exemption, subsidy for issuing costs and grant schemes to subsidise external review.
Absa’s Story
Absa Bank Botswana, with its inaugural listing in December 2023, and the subsequent tap issuance in February 2024, has become an inspirational story to many, particularly with how the proceeds have created a tangible impact in communities.
According to its Impact Report, the bond’s proceeds were deployed into affordable housing and renewable energy projects, to address Sustainable Development Goals (SDGs) number 8 and number 13, being decent work and economic growth and climate action, respectively. The deployment of the proceeds of the bonds has impacted 1,240 lives and created 280 jobs, among other metrics reported.
While it is currently the only listed Sustainable Bond, BSE said a combination of this inspiring impact story and the innovative services and incentives the BSE provides have without a doubt increased the attention to this debt instrument. Access Bank Botswana is one of the banks expected to come to the market with a sustainable bond.
Stanbic’s P27m Financing
At Stanbic Bank Botswana, the bank, through the Business and Commercial Banking’s Agric business played a role as the financier of the Kwenantle Farmers’ Solar & irrigation Project with a sum of P27 million.
“Through our financing, our aim is to promote environmental stewardship, reduce operational costs for farmers and foster long-term economic and ecological benefits to our communities,” Lesego Osman, Stanbic’s Head of Business and Commercial Banking said during the groundbreaking a month ago.
He said the introduction of green energy aligns perfectly with Stanbic’s Environmental, Social, and Governance (ESG) principles.
“We actively reduce carbon footprints and promote renewable energy, setting a benchmark for sustainable practices and mitigating climate change impacts,” he said adding that the project will create numerous job opportunities in the Talana Farms area, enhancing the livelihoods of local farmers and strengthening community resilience.
The P27 million investment covers the erection of a 1MW solar plant to power irrigation systems on a new 264-hectare expansion. The project is expected to be commissioned in the next 6 months. The total land under irrigation is envisioned to increase to 839Hac with 29 pivots which will award Kwenantle with an energy saving of approximately P1.6m/annum and employment increase from 104 - 154 permanent employees.
Stanbic Bank, through its Corporate and Investment Banking Division, has undertaken several projects focused on solar and green financing. Recently, the bank partnered with Wilderness Safaris to fund related initiatives.
FNBB Finances Largest Renewable Energy Initiative
FNBB has also been making traction in terms of sustainable financing, having funded Botswana’s first largest renewable energy initiative through its Corporate and Investment Banking division, Rand Merchant Bank Botswana (RMB Botswana) for the Mmadinare Solar Complex Project in Selebi Phikwe. RMB Botswana played a pivotal role as Lender, Hedging Bank, and Account Bank, contributing 50% to the debt funding of this initiative.
The Mmadinare Solar Complex Project is a groundbreaking initiative, featuring a 60MW scalable solar PV plant developed by Selebi-Phikwe Solar (Pty) Ltd, a subsidiary of Scatec ASA.
The project, awarded to Scatec ASA by the Botswana Power Corporation (BPC), extends beyond electrification capacity - it is a catalyst for positive change. Under the signed Power Purchase Agreement, Scatec not only supplies 100% of the power produced by the solar complex to BPC but also contributes to the country’s energy diversification efforts.
FNBB said this transformative deal aligns seamlessly with RMB Botswana's broader sustainability strategy, emphasising a shift from traditional energy financing to green energy solutions. The approved Energy and Fossil Fuel Financing Policy positions the Bank as a key player in driving positive change, facilitating the transition to new green energy solutions that benefit all.
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