In a pioneering move, the Tanga Urban Water Supply and Sanitation Authority (Tanga Uwasa) is set to launch the first-ever water infrastructure green revenue bond issued by a government institution. The bond, slated for this month, aims to raise 53.12 billion TZS to finance crucial water development projects in the region.
Financial experts, while acknowledging the potential of green bonds, emphasize the need for caution in government adoption. They stress the importance of meticulous planning and obtaining credit ratings from reputable agencies to ensure transparency and mitigate risks.
Last year, commercial giants CRDB Bank and NMB Bank issued multicurrency green bonds in Tanzania, both of which were oversubscribed, indicating a significant appetite for such investments.
Tanga Uwasa's Managing Director, Mr. Geofrey Hilly, confirmed that all necessary approvals have been secured from the government, and the official launch is imminent this month, with trading expected three weeks after the launch.
The 53.12 billion TZS raised through the bond will be dedicated to water infrastructure projects, focusing on expanding distribution to critical areas like Mkinga, where water supply is particularly essential. Mr. Hilly expressed confidence in the bond's success and oversubscription but affirmed that only the proposed amount would be collected.
The funds generated will be allocated to increase the water supply from 45 million to 60 million liters per day and convert 10,000 water meters to prepaid meters.
Dr. Charles Mwamwaja, Commissioner for Financial Sector Development in the Ministry of Finance, lauded Tanga Uwasa's initiative, stating that it marks the first-of-its-kind green bond in Sub-Saharan Africa. He emphasized a shifting trend, with over 80% of bond purchasers being ordinary citizens, showcasing a potential avenue for institutions to secure funding for investments.
Dr. Tobias Swai, a banking and finance lecturer at the University of Dar es Salaam, highlighted the success of recent green bonds, citing oversubscription and investor appetite. He stressed the need for responsible fund management to avoid defaults and urged public institutions to leverage such investment opportunities.
Independent financial market expert Mr. Christopher Makombe expressed optimism about Tanga Uwasa's green revenue bond, emphasizing the positive impact on GDP once projects are completed. He cautioned the importance of proper planning, revenue projections, and responsible fund management to minimize default risks.
In conclusion, the introduction of Tanzania's first water infrastructure green revenue bond reflects a strategic shift in funding approaches for public projects, opening alternative avenues for development in the country.