Green finance is no longer a peripheral concept; it is becoming a cornerstone of East Africa’s economic strategy. The region is leveraging sustainable finance to attract global capital and accelerate climate-resilient development.
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Rwanda has taken a bold step with its Green Exchange Window (GEW), a dedicated platform on Rwanda Stock Exchange for green, social, and sustainability-linked products. Developed in partnership with the Luxembourg Stock Exchange, this initiative aims to channel investments into renewable energy, sustainable infrastructure, and climate-resilient projects, positioning Rwanda as a regional hub for sustainable finance under the Kigali International Financial Centre.
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Kenya has also made significant progress through its Green Bonds Programme, launched in 2017 to create a domestic market for climate-focused investments. The programme, supported by the Nairobi Securities Exchange and the Climate Bonds Initiative, has enabled the issuance and listing of green bonds, including Kenya’s first green bond in 2019, which was cross listed on the London Stock Exchange. These instruments have mobilised millions of dollars for green real estate and infrastructure projects, reinforcing Kenya’s commitment to sustainable development.
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In addition, East African countries are among the largest beneficiaries of the Green Climate Fund (GCF), which provides critical financing for adaptation and mitigation initiatives. Recent allocations include substantial funding for programmes that enhance food security, promote climate-smart agriculture, and strengthen resilience across sectors such as energy and infrastructure. Regional institutions like the Development Bank of Rwanda have secured accreditation for direct access to GCF resources, further expanding opportunities for climate finance.
This article explores the drivers behind this shift, highlights landmark initiatives such as Rwanda’s carbon credit strategy and Kenya’s planned $500 million sustainability-linked bond, and outlines practical steps for businesses and policymakers to harness these opportunities.
Context and relevance
East Africa faces a dual challenge: driving economic growth while mitigating climate risks. Traditional financing models are proving inadequate for funding clean energy, sustainable agriculture, and resilient infrastructure. Green finance through instruments like green bonds, sustainability-linked loans, and carbon markets, offers a viable solution.
Rwanda has secured a $200 million ESG-linked loan from JP Morgan, supported by a partial credit guarantee from the African Development Bank (AfDB). This landmark transaction, finalised in mid-2024, represents Rwanda’s inaugural access to international sustainable financing under its Sustainable Finance Framework. The funds will be directed toward strategic projects such as urban economic development, modern irrigation systems, and sustainable agriculture initiatives, all aligned with Rwanda’s Vision 2050 and its carbon-neutral ambitions.
In addition, Rwanda launched a national carbon credit initiative that has generated 2.25 million verified credits under Article 6 of the Paris Agreement, primarily from clean cookstove projects. These credits, certified through partnerships with Gold Standard and other international registries, are attracting ESG investors globally and reinforcing Rwanda’s position as a credible player in the international carbon market. Revenues from carbon trading are being reinvested into renewable energy mini-grids and climate-resilient infrastructure, creating a dual-track model for sustainable development. The Development Bank of Rwanda (BRD) has also made history by issuing the first Sustainability-Linked Bond (SLB) by a national development bank globally and in East Africa. The inaugural issuance, launched in September 2023 and listed on the Rwanda Stock Exchange, targeted Rwf30 billion (approx. $24.8 million) as part of a larger Rwf150 billion Medium-Term Note programme. The SLB features an innovative step-down coupon structure, incentivising BRD to meet key ESG targets such as increasing women-led business loans, financing affordable housing, and mainstreaming ESG practices among partner financial institutions. This groundbreaking instrument diversifies BRD’s funding sources and sets a precedent for sustainable finance innovation across Africa
Kenya, on the other hand, is preparing to issue Africa’s first sovereign Sustainability-Linked Bond (SLB) worth $500 million in early 2026, tying interest rates to measurable targets such as forest cover restoration and rural electrification. This move signals a change in basic assumptions in sovereign borrowing, aligning fiscal policy with climate action. Kenya also made history in 2019 when Acorn Holdings issued East Africa’s first corporate green bond, raising KSh 4.3 billion (approx. USD 40 million) to finance green-certified student accommodation in Nairobi. The bond was certified under the Climate Bonds Standard, cross-listed on the Nairobi Securities Exchange and the London Stock Exchange and partially guaranteed by GuarantCo. This landmark transaction catalysed Kenya’s domestic green bond market and demonstrated investor appetite for sustainable real estate projects.
Tanzania is as well rapidly advancing its green financing and ESG framework, driven by a combination of proactive government policies, central bank guidelines, and innovative private-sector initiatives. The nation's green finance market is gathering momentum through pioneering green and sustainability bond issuances from institutions like CRDB Bank, NMB Bank, and Tanga UWASA, financing crucial projects in agriculture, renewable energy, and water infrastructure. The regulatory environment is solidifying with the Capital Markets and Securities Authority (CMSA) introducing new sustainability bond regulations and the Bank of Tanzania (BoT) mandating the management of climate-related financial risks. While the Dar es Salaam Stock Exchange (DSE) pushes for greater transparency and corporate reporting, the country is actively working to overcome awareness challenges and align its financial sector with global sustainability standards.
Uganda complements regional efforts with its National Climate Finance Strategy (NCFS) for 2025–2030, a comprehensive blueprint designed to close a staggering $28.1 billion climate finance gap. The strategy focuses on mobilising resources from both domestic and international sources, blending public and private capital to fund priority projects in clean energy, agro-ecology, electric mobility, and green infrastructure. It aligns with Uganda’s updated Nationally Determined Contribution (NDC), which targets a 25% reduction in greenhouse gas emissions by 2030, and emphasises adaptation measures to protect vulnerable communities from climate shocks. The NCFS also seeks to diversify financing instruments by promoting green bonds, carbon markets, and debt-for-nature swaps, while encouraging private sector participation through incentives and risk-sharing mechanisms.
Insights and analysis
Investor pressure and global standards are driving adoption of ESG frameworks. International capital markets demand sustainability-linked disclosures, making access to affordable capital contingent on measurable ESG outcomes. Regulatory bodies like EASRA are harmonising standards and disclosure requirements to build investor confidence.
Innovative financing models include Rwanda’s reinvestment of carbon revenues into solar mini-grids and Kenya’s sovereign SLB tied to climate targets. Opportunities span renewable energy, climate-smart agriculture, and sustainable cities, but challenges persist. High compliance costs, limited ESG data, and verification gaps hinder scalability.
East Africa needs over $270 billion to meet climate targets, yet most funding comes as loans, raising debt sustainability concerns.
Recommendations
Governments should simplify policies and develop regional green finance taxonomies to harmonise standards and attract cross-border investments.
Scaling carbon markets under Article 6 frameworks can unlock new revenue streams.
Investing in ESG data infrastructure is essential for accurate reporting and investor confidence. Blended finance models combining concessional funds with private capital can de-risk projects and attract institutional investors.
Capacity building for SMEs and financial institutions will empower them to structure sustainability-linked instruments and navigate compliance requirements.
Green finance can redefine East Africa’s growth trajectory. By embracing sustainability-linked instruments, carbon markets, and robust ESG frameworks, the region can secure billions for climate-aligned investments and inclusive development.
The next five years will determine whether East Africa becomes a global model for climate-smart financing or risks being left behind in the green economy transition.
Caleb Brandon Ogola is an assurance senior associate at PwC Rwanda. Benita Ndakebuka is an assurance associate at PwC Rwanda.