By VINCENT OWINO

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A Tanzanian local water utility has issued a green bond of Tsh53.12 billion ($20.8 million), a first in East Africa by a sub-national entity, in efforts to boost water conservation and access to the critical resource.

Issued by the Tanga Urban Water Supply and Sanitation Authority (Tanga Uwasa), the bond will be floated on the Dar es Salaam Stock Exchange (DSE) and will offer a return of 13.5 percent, paid semi-annually.

It is meant to raise funds for the utility to boost water supply to reach 100 percent of the Tanga population, up from the current estimated 96 percent, and also support its environmental conservation efforts in the city and surrounding towns.

Supported by Nairobi-based Financial Sector Deepening (FSD) Africa, the bond is the first of its kind to be issued by a sub-national public entity in East Africa, raising hopes of utilising the growing source of sustainable finance to raise funds for local governments and entities in the region.

Read: CRDB issues Tanzania’s first green bond

Tanzania’s Vice-President Phillip Mpango said the bond and similar ones “will reduce pressure on government budget and provide an opportunity to focus on priority social initiatives that can’t be financed via commercial windows,” urging for more to follow.

“The Tanga Uwasa Green Bond represents a significant step towards inclusive growth,” said FSD Africa Chief Executive Mark Napier.

“It reinforces our belief in the transformative impact of strategic partnerships and underscores our unwavering commitment to driving positive change for communities across the continent.”

Green bonds have been gaining currency in recent years, and utilities from across the globe are estimated to have so far raised billions of dollars from them, according to the International Capital Markets Association database on green bonds.

In Africa, Tanga Uwasa will be the seventh utility to float a green bond, with all the six others based in Mauritius. In the water utility sector, it will be the first.

Tanzania currently has the highest number of green bonds in East Africa, although it is yet to issue one as a sovereign, which Kenya is currently inching towards.