Introducing green bonds in Djibouti for climate change financing is an important step towards building a sustainable future for the country. The purpose of this report is to make recommendations on how Djibouti can build a pathway towards the issuance of a green or sustainability bond to finance infrastructure that will make the country more resilient to nature-related shocks and social challenges.
The report identifies key recommendations for Djibouti. Despite a lack of capacity for green bond issuance, there is broad interest in green bonds and environmentally friendly projects from various stakeholders. More specifically, there is a strong interest in a sustainability Sukuk format to tap into Islamic finance flows. There is strong support within the government and positive interest from the banking sector. However, it is important to ensure that the borrowing entity is capable of supporting the burden of debt since green bonds are debt instruments. Currently in Djibouti, outstanding loans in arrears represent a bottleneck and this is affecting the ability of the country to get an international credit rating from major credit rating agencies.