Ghana reveals plans to issue African social bonds for USD 2 billion

The Republic of Ghana is reportedly planning to sell green and social bonds for up to USD 2 billion by November this year, making it the first African country to issue debts to fund development programs.

Finance Minister of Ghana, Ken Ofori-Atta, was quoted saying that the country seeks to borrow over USD 5 billion from international markets in 2021, and the proceeds from these sustainable bonds will be used to refinance debt and to pay for health or education expenses.

Elaborating on the specifics of the debt, Ofori-Atta said that the bonds are expected to be issued in the fall this year. He further added that the maximum amount raised will be USD 2 billion, as Ghana has already sold debts worth USD 3.03 billion out of the approved USD 5 billion budget.

Overall, a total of USD 3.5 billion will be allocated to debt refinancing for environmental and social projects, and the actual new debt raised will amount to USD 1.5 billion, he clarified.

Notably, Ghana has been spearheading the onslaught of social bonds in Africa, capitalizing on an instrument that has gained popularity since the coronavirus pandemic. Nevertheless, only a few other sovereigns have used them to date, namely Ecuador and Chile.

According to sources, Ghana will utilize these funds to accelerate a free secondary-school initiative launched in 2017 among other projects, despite having registered the lowest economic growth in 37 years during 2020.

Meanwhile, the West African country is also focusing on bettering its tax revenue collection, which has been predominantly lower as compared to its regional peers.

This decision is in line with President Nana Akufo-Addo’s statement, which revealed that the tax base was set to record a five-factor growth, reaching 15.5 million after the government implemented a system where all national identification numbers were identified as tax numbers.

Source Link –

https://www.aljazeera.com/economy/2021/7/5/ghana-plans-to-issue-africas-first-social-bonds-with-2b-sale