The Bank of Mozambique has sent out for public consultation a proposal to issue green and blue bonds. What are they and how can the economy benefit from these instruments?
Although there is no consensus, it is estimated that the global sustainable finance market will exceed 8.5 trillion dollars by 2024, with a compound annual growth rate of 21.15 per cent, a trend that the national economy wants to take advantage of. To this end, in February Mozambique began to take the first steps towards creating a financing channel for sustainable projects, establishing a regulatory framework for issuing green bonds and blue bonds. The initiative aims to attract investment in renewable energies, marine conservation, sustainable tourism and climate resilience.
The draft decree, put out for public consultation by the Bank of Mozambique, establishes the legal framework for issuing these financial instruments in the country. The aim is to provide clear rules in line with international standards, allowing investors and issuers to access the capital market to finance projects with a positive environmental and social influence.
Regulatory framework
The regulation establishes that the issuance of these securities may be carried out by authorised financial intermediaries linked to the Mozambique Stock Exchange, ensuring that the issuance and subscription processes follow international standards of transparency and credibility. Only projects with viability and measurable environmental and social purposes may be considered eligible for financing.
Issuing green bonds can bring advantages by strengthening Mozambique’s position in international markets and promoting sustainable development
In addition, the initiative comes in the context of growing global interest in sustainable investments, with various financial institutions and governments supporting policies for the transition to a green (environmentally friendly) and blue (based on marine resources) economy. For Mozambique, this movement represents a strategic opportunity to attract foreign capital, strengthen its position in the capital markets and speed up the implementation of structuring projects.
Overview of the global market
The Climate Bonds Initiative (CBI) believes that in order to tackle climate challenges, annual issuance of sustainable bonds should reach 5 trillion dollars starting this year. The international non-profit organisation is working to mobilise the bond market towards new solutions. Founded in 2007, the CBI aims to accelerate the transition to a low-carbon economy and promote the development and issuance of green bonds.
After a positive performance in 2024, continued growth is expected in 2025, driven by the energy transition, advances in legislation and better conditions for investors.
Advantages for the country
Issuing green bonds can bring several advantages to Mozambique, strengthening its position in international markets and promoting sustainable development. The inclusion of these financial instruments in the country’s portfolio will help improve its ranking in indices such as the Absa Financial Markets Index, a ranking of African financial centres.
In addition, green bonds attract investors looking for socially responsible investment opportunities, interested in supporting projects that promote environmental sustainability and benefit their own ESG strategies.
By diversifying the investor base, these bonds make it possible to raise new funds that would not normally be available for traditional bonds, thus broadening the sources of financing.
Benefits on several fronts
Promoters of sustainable bonds point to advantages in various aspects of the life of a company benefiting from this type of financing. Companies that choose to issue green bonds are scrutinised for their more responsible practices, which strengthens their reputation with clients and investors, as well as stimulating innovation and operational efficiency.
Issuing these bonds strengthens the financial market, with a measurable role in the realisation of the United Nations Sustainable Development Goals (SDGs)
At a structural level, the issue of these securities strengthens the financial market, with a measurable role in the realisation of the United Nations Sustainable Development Goals (SDGs), contributing to targets related to the use of clean energy, gender equity and poverty reduction.
Supervision and credibility
The creation of sustainable bonds in Mozambique will attract a new set of investors, said Pedro Noronha, CEO of Banco BiG Moçambique, an investment institution that has been following the development of the financial market. ‘There is growing investor interest in this segment,’ he told E&M.
The CEO of Banco BiG expects new financial tools to emerge to boost renewable energy, fisheries and sustainable tourism projects, among others. ‘These instruments can unlock crucial investments, reducing financing costs and achieving greater social and environmental impact.’
To guarantee transparency, Noronha advocates clear rules for the publication of detailed reports on the allocation of funds, overseen by independent bodies. ‘Annual impact reports will be key to measuring the success of the funding and ensuring that the resources are used as intended,’ he emphasised.
financial products promise sustainability certification
Text: Felisberto Ruco – Photo: D.R.
