Following the issuance of Sub-Saharan Africa’s first green bond, BURN Manufacturing, the largest producer and distributor of clean cookstoves, plans to establish a new plant in Lagos, Nigerian economic hub. On Friday, the Kenyan company announced that it would use the proceeds from the $10 million bond to expand its current production capabilities in Kenya. Up from the current 400,000 units per month, production of these lifesaving biomass, electric, and LPG stoves will rise to a whopping 600,000. Peter Scott, CEO and Founder of BURN believes strongly in the ability of financial innovation to promote positive environmental and social change. This belief is reflected in the company’s decision to present the first green bond that promotes clean cooking.
Green bonds have seen rapid growth in recent years due to factors like the growing interest of the investment community in environmentally responsible financing and the potential tax benefits to investors. According to Scott, BURN is eager to use this cutting-edge tool to accelerate the transition to a more sustainable future. DRY Associated Limited played a key role in the bond issuance as the Placement Agent. Technical input on the bond structure and technical support for the second-party opinion was provided by FSD Africa, a specialised development agency financed by UK International Development, and Agusto & Co., a prominent Pan-African Credit Rating Agency and Green Bond Verifier.
Emissions of particulate matter and carbon monoxide will be reduced.
Evans Osano, Director of Capital Markets, FSD Africa, expressed the organisation’s satisfaction in supporting the issuance of the first green bond to fund clean cooking initiatives in sub-Saharan Africa. Osano noted that the majority of African households rely on biomass fuel as their primary source of energy for cooking and that the funds raised would help those households make the switch to more environmentally friendly options. Osano emphasised that the reduced emissions of particulate matter and carbon monoxide have positive health effects, especially for women, due to their disproportionate exposure to environmental air.
Also, the UN Economic Commission for Africa and the International Monetary Fund (IMF) estimate that Sub-Saharan Africa needs to raise $50 billion per year to adapt agriculture, power, and urban infrastructure to the effects of climate change. Natural disasters are becoming more frequent and severe due to climate change, which causes disruptions in agricultural production and damage to infrastructure and threatens the long-term viability of urban areas. However, it is highly unlikely that the anticipated public financing accessible from national governments and international donors will be sufficient to meet the region’s financing needs, highlighting the importance of mobilising private capital.
Cleaner cooking solutions for the general public would be encouraged.
According to the Africa Energy Outlook report released by the International Energy Agency in 2022, 130 million people around the world would have to stop using dirty cooking fuels every year in order for everyone to have access to clean cooking fuels and technologies by 2030. Cleaner cooking solutions for the general public can be encouraged by issuing green bonds. Both the University of Pennsylvania and the University of Chicago have independently verified the effectiveness of BURN stoves, and Yunus Social Business has conducted a thorough impact assessment survey. It is well documented that using the stoves positively affects health, finances, and the environment. With funding from the Green Bond, this help could reach an additional 2 million homes by 2024.
Agusto & Co.’s Regional Director (East Africa), Ikechukwu Iheagwam, voiced delight in helping BURN Manufacturing issue the first-ever green bond to fund clean cooking in Africa. Iheagwam praised BURN for its openness in its mission to reduce GHG emissions by producing cookstoves with ISO/IWA Tier 4 thermal efficiency ratings, which require significantly less wood and charcoal fuel than lower-rated stoves. Iheagwam maintained that the project’s catalytic social, financial, economic, and health advantages were quite compelling despite the project’s anticipated significant environmental benefits in terms of tonnes of firewood saved and tonnes of carbon dioxide emissions reduced for each stove manufactured.
Export success story of BURN was a shining example of Kenya’s ability.
Lastly, the Head of Research at Dry Associates Investment Bank, Reuben Mabishi, said the firm is pleased to have served as the Transaction Advisor for BURN’s Green Bond programme. Mabishi maintained that the Green Bond programme highlighted the potential of fixed-income investments in Kenya to stimulate the country’s capital formation, employment, and economic growth. They are impressed by BURN’s leadership team’s dedication, knowledge of green finance, and the size and efficiency of the company’s manufacturing operation in Kenya. Mabishi remarked that BURN’s export success story was a shining example of Kenya’s ability to provide quality to the world.