A “challenge session” on how a US$200 million bond issue for climate-smart agriculture in Africa can be structured.
Say an international investment fund is willing to place US$200 million in a seven-year bond for climate-smart agriculture. Is this currently possible in the context of Africa? What needs to be done to make it happen? At the level of the investment fund, it needs confidence not only in the strength of the structure (Is it of a high investment grade – and how high must that be?), but also that it delivers the promised impact in terms of climate-smart agriculture (so, how can these impacts be defined, and in practice how are they going to be measured?). The issuer of the bond is likely to be a regional institution like Afreximbank which has to pass through local banks to be able to distribute the funds – how is this done, what are the risks involved and how can they be mitigated? How much structuring will the receiving banks (and other on-lenders) need to show in order to qualify for the funds? Is there a role of national public agencies to help mitigate risks? What kind of lending schemes should local financiers develop – should these be trilateral, including NGOs to ensure farmers are able to use the funds effectively? Do the costs of structuring such a transaction still enable affordable finance to farmers, or is some form of explicit subsidy necessary to make the transaction work?
Coordinated and chaired by Afreximbank.
Day 2: 08 November 2016 09:00 - 10:45
Studio 313 & 315Session organisers