Ghana is entering the rising social bond market

Ernest Addison, Governor of the Bank of Ghana

Ghana’s planned issue of a social bond could kickstart a trend in Africa.

“With this issue we’re looking at refinancing those debts already raised to undertake projects in the environmental and social sectors,” Charles Adu Boahen, minister of state for finance, told Bloomberg this week, as Ghana prepares to raise up to $1 billion through bonds.

Many more countries in Africa are likely to follow Ghana’s example, says Churchill Ogutu, head of research at Genghis Capital in Nairobi, because of the pandemic’s devastating impact on tax revenues, and the need to fund critical social sectors.

On a country level, African states have been left behind in the social bond trend, as they typically issue bonds to fund debt obligations and heavy infrastructure projects, not social change. Lately, they have had plenty of success funding debt and infrastructure through euro-denominated bonds.

Read more on Quartz Africa.