Ecobank Bets $450M Africa’s Biodiversity Can Be Saved
Ecobank is betting that saving African biodiversity is good business — and investors are all in.
In May, Togo’s Ecobank became the first commercial bank in Africa to issue a nature bond, mobilizing $450 million that will primarily be utilized to finance sustainable agriculture, biodiversity, and water infrastructure across sub-Saharan Africa. Floated at the main market of the London Stock Exchange, it is being touted as the world’s first commercial bank-issued nature bond that meets standards set by the International Capital Market Association (ICMA).
The ICMA last year introduced the nature bond label as a secondary designation under its Green Bond Principles framework. Ecobank thus becomes the first commercial bank to issue a green bond with the nature bond label.
The offering creates a new route for investors who want to help protect the continent’s biodiversity. Home to 1.5 billion people — about 20% of the global population — Africa hosts 25% of global biodiversity, although it has lost nearly a quarter of its pre-industrial total, according to a study by the Stockholm Resilience Centre (SRC).
Conflicts, perennial food insecurity, economic instability, and stunted development are among the culprits, and action is only becoming more urgent as the climate crisis worsens, yet Africa receives less than 3% of global nature finance.
Given the challenge, the Ecobank bond has generated unprecedented excitement. The 10.25-year, Tier 2 eurobond was oversubscribed nearly four times, attracting order books in excess of $1.36 billion against an initial target of $350 million. Owing to the overwhelming demand, Ecobank decided to increase the transaction by $100 million and tighten pricing by 50 basis points. Moody’s awarded the transaction its SQS1 Excellent score, the highest possible sustainability quality mark.
“This transaction is a defining moment for African sustainable finance,” said Jeremy Awori, Ecobank CEO. “Investors did not just support this bond. They demanded more of it, allowing us to increase the size and tighten pricing.”
Biodiversity Investors
FMO, the Dutch entrepreneurial development bank, was the anchor investor with a $50 million participation, noting that the bond aligns with its strategy of supporting green and sustainable finance that contributes to biodiversity in sub-Saharan Africa. It was the second time FMO has served as anchor investor for an Ecobank transaction. In 2021, it invested a similar amount in the bank’s inaugural $350 million Tier 2 sustainability notes.
Finnfund was another major investor, with a $15 million ticket; the bond falls in line with the Finnish development financier and impact investor’s broader focus on safeguarding biodiversity.
“By supporting investments that promote sustainable land use and protect natural resources, Finnfund aims to contribute to preserving the natural capital that economies and livelihoods depend on,” said Ulla-Maija Rantapuska, Finnfund’s senior investment manager, in a prepared statement.
For Ecobank, the nature bond’s debut was timely, enabling it to refinance its outstanding $350 million of 8.75% notes, which are due to mature in June 2031. The proceeds of the transaction will be ring-fenced to support smallholder farmers adopting sustainable agricultural practices. Additionally, the funds will back agri-processors with verified deforestation-free supply chains. Funding will also target water infrastructure protecting freshwater ecosystems that millions of people rely upon.
Ecobank operates in 34 sub-Saharan African countries, where it boasts 32 million customers and $801 million in pre-tax profits as of last year; it has identified 24 markets as key for biodiversity lending. Critical lending criteria favor countries where agricultural land-use change is the primary driver of biodiversity loss.
John Njiraini is a contributing correspondent based in Nairobi, Kenya.
