Green bonds/Internet PhotoGovernment will issue its first-ever sovereign green bond early next year, targeting up to $500 million (about UGX 1.86 trillion) to finance climate-friendly projects.The bond, similar to a conventional Treasury bond but ring-fenced for environmental projects, is aimed at narrowing Uganda’s huge climate financing gap and mobilizing private capital for clean energy, climate-resilient agriculture and flood-resistant infrastructure.Dennis Muggaga, Head of the Climate Finance Unit at the Ministry of Finance, Planning and Economic Development, said government has developed a Green Bond Framework and expects to finalize it by end of this month, paving way for investor roadshows.Muggaga said the bond will be split into local and foreign currency tranches to attract both domestic banks and international investors.“As a Ugandan, I’m not interested in holding a US dollar. I want it in my own currency,” Muggaga said, explaining the plan to offer a shilling-denominated option alongside a dollar tranche.Unlike conventional Treasury bonds whose proceeds go into the Consolidated Fund, green bond proceeds must be allocated to projects that meet strict environmental and social criteria, with government required to report to investors on fund utilization and project performance.The Ministry is working with the European Union under its Global Green Bond Initiative, which has committed nearly 20 million Euros (approx. UGX 87 billion) to cover issuance costs and subsidize the coupon rate – a discount known as a “greenium” in green finance. The EU also plans to buy part of the maiden bond.Local commercial banks, which already act as primary dealers for government securities, are being brought into the process to diversify their portfolios and meet ESG requirements. The bond will be tradable on the secondary market.The issuance comes as Uganda faces a massive climate finance shortfall. While the country needs $28.1 billion (UGX 104.84 trillion) by 2030 to meet its Nationally Determined Contribution goals, only $5.1 billion (UGX 19.03 trillion) has been mobilized, leaving a deficit of about $23 billion (UGX 85.81 trillion).“We are not doing very well. That is why we are coming into these innovative financing instruments, where you can bring in a lot of money at the same time,” Muggaga said.Experts however warn that Uganda needs a credible pipeline of ready projects to absorb the funds.The sustainable finance market is now a multi-trillion-dollar sector, but Africa captures less than 1% of global sustainable bond issuances. If issued, Uganda will join a growing list of African countries using green bonds to fund clean energy, water systems and resilient infrastructure.-URNThe post Uganda Targets UGX 1.86 Trillion in Maiden Sovereign Green Bond to Fund Climate Projects appeared first on Business Focus.