Nairobi-based pan-African housing lender Shelter Afrique is eyeing the domestic market for new capital via green bonds.

Shelter Afrique Managing Director Andrew Chimphondah said green financing offered a cheaper option for raising funds for new mass housing projects.

“We will engage with some of our partners to access this funding for affordable housing in Africa in the coming year. It is not only cheap but its bottom line directly impacts the environment, like the construction. We are making a strategic decision to add it to our funding mix,” he said, adding that no specific amount was targeted yet.

Kenya’s green bond market started on a historical note this year when Acorn Holding and its private equity fund partner Helios raised Sh4.3 billion representing an 85 percent success on the Sh5 billion target.

“Kenya’s capital market has the capacity to support green bonds not just for Kenya but also for the East African region. However, most capital markets across Africa need to be strengthened,” said Mr Chimphondah.

Speaking after he received an internally generated research from Shelter Afrique Centre of Excellence, he said growing demand for housing made the option of the green bond attractive.

The study found that Kenya and other African cities were urbanising at a very fast rate, creating a housing crisis.

“Our research indicates that Africa needs Sh140 trillion in fresh funding to effectively address this housing crisis and innovative funding options like green bonds comes in handy,” said Mr Chimphondah.

An International Finance Corporation report entitled ‘Climate Investment Opportunities in Cities’ released this year found that out of the $29.4 trillion spent on green financing across six key sectors, green buildings took $24.7 trillion or 84 percent.

The rest went to electric vehicles, public transport infrastructure, climate-smart water, renewable energy and municipal solid waste management.

South Africa raised Sh8.9 billion via its first municipal green bond in 2014 with a second one in 2017 attracting Sh6.98 billion.

Nigeria’s debut green bond in 2017 raised Sh3.1 billion.