Fresh opportunity for investors as NMB floats sustainability bond

From left: NMB Bank Plc CEO Ruth Zaipuna, Treasury Registrar Nehemiah Mchechu and the bank’s board chairman, Dr Edwin Mhede lift their hands to symbolize the launch of the NMB Jamii Bond in Dar es Salaam yesterday. PHOTO | THE CITIZEN CORRESPONDENT

What you need to know:

  • The profits of the debt security, known as the NMB Jamii Bond, will help to strengthen resilience against the harmful effects of climate change

Dar es Salaam. NMB Bank Plc floated a three-year sustainability bond yesterday in a deliberate effort to increase funding for climate-related projects while also providing investors with a new and attractive investment channel.

Codenamed NMB Jamii Bond, the proceeds of the debt security will contribute to building resilience against the negative impacts of climate change, achieving sustainable infrastructure, promoting efficient and sustainable use of natural resources such as water and energy, and supporting other essential environmental and social projects that touch Tanzanian communities.

“These projects include renewable energy, energy efficiency, pollution prevention and control, sustainable water and wastewater management, green buildings, clean transport, climate change adaptation, environmentally sustainable management of living natural resources and land use, affordable housing, access to essential services, employment generation, food security, and socio-economic empowerment of women and youth,” the banks said in Dar es Salaam yesterday.

Both retail and institutional investors, including NMB customers and non-customers, have equal chances of investing in the bond, which offers an interest rate of 9.5 percent per annum, which is paid every three months.

Through debt security, which an investor can purchase with as little as Sh500,000 from any NMB branch or any broker licenced by the Capital Markets and Securities Authority (CMSA) as a stockbroker, NMB Bank Plc seeks to raise Sh75 billion with a green shoe option of Sh25 billion.

The co-anchors of NMB Bank’s Jamii Bond include the World’s Bank’s private sector arm, the International Finance Corporation (IFC), and British International Investment Plc (BII).

The latter is wholly owned by the United Kingdom Foreign, Commonwealth and Development Office.

Touted as the first sustainability debt security to be issued in the East African region, the NMB Jamii Bond aligns with goals numbers 4, 5, 6, 7, 10 and 13 of the United Nations’ Sustainable Development Goals (SDGs).

The goals deal with quality education, gender equality, clean water and sanitation, affordable and clean energy, reduced inequalities, and climate action in that order.

This issuance follows CMSA’s approval for NMB to issue the 1st tranche of the bank’s 10-year Multicurrency Medium Term Note (MTN) Programme worth Sh1 million.

NMB has worked with ABSA Bank Tanzania Limited as joint lead transaction advisors, KPMG as the reporting accountant, Rex Advocates as the legal advisor and Orbit Securities as a sponsoring broker.

Speaking in Dar es Salaam yesterday, NMB Bank’s chief executive officer, Ms Ruth Zaipuna, said with the Jamii Bond, the lender hopes to continue diversifying its funding mix and support its growth aspirations while positively impacting societies.

“You will recall we had an MTN programme worth Sh200 billion that was approved back in 2016 and managed to issue four tranches, raising over Sh220 billion. This is our new multicurrency MTN programme, which is worth Sh1 trillion, in which we are rolling out our first tranche under the Jamii Bond,” she said.

"The NMB Jamii bond will not only help stimulate the development of the local capital market and diversify our funding sources but also provide opportunities for small investors to invest in bonds of lower denominations, diversify their investments, and trade in the bond market, thus providing needed inclusion and access using the bank’s easily accessible network.” added Ms Zaipuna.

The NMB Jamii Bond offer is open from today, September 25, 2023, to October 27, 2023. Applications for the NMB Bond are available from any of our 230 NMB branches or licenced stockbrokers.

Speaking during the event, the Treasury Registrar, Mr Nehemia Mchechu, said the government was impressed by the development path that NMB Bank was taking.

Once a wholly-owned government entity, NMB was privatised to strategic investors in 2005, with the government retaining 31.78 percent of the shares.

“It was once a government-owned lender, but later it was privatised for strategic investors, and now it is doing fine,” he said.

He said the performance exhibited by NMB should be emulated by other state-owned entities, noting that during the coming few years, a number of changes could be effected in the running of state-owned entities.