Safaricom Plc, East Africa’s leading telecommunications giant, has successfully secured its inaugural Sustainability Linked Loan (SLL) in a historic deal valued at KES 15 billion. The company’s groundbreaking commitment to Environmental, Social, and Governance (ESG) initiatives has garnered significant attention and represents a pivotal moment in the region’s financial landscape.
This historic agreement, facilitated by a consortium of prominent local banks, includes Standard Chartered Bank, Stanbic Bank, ABSA Bank, and Kenya Commercial Bank (KCB). Notably, it marks the largest-ever ESG linked loan facility in East Africa and represents Safaricom’s first foray into this innovative financing approach, making it the inaugural Kenya Shilling denominated SLL.
An SLL is a distinctive financial instrument where the interest rate is intrinsically tied to the borrower’s sustainability performance, specifically designed to align with their ESG objectives. Successfully reaching and surpassing these predetermined targets leads to reduced interest payments, making it an attractive option for socially responsible investors.
Safaricom’s Chief Executive Officer, Peter Ndegwa, emphasized the significance of this momentous achievement, stating, “This deal is a significant milestone for Safaricom as it aligns our financial strategy with our sustainability agenda, a reflection of our commitment to transforming lives by partnering for growth.”
The consortium of banks behind this groundbreaking funding initiative, led by Standard Chartered Bank Kenya as the Global Coordinator, Sustainability Coordinator, and Mandated Lead Arranger, is excited about the partnership. Kariuki Ngari, CEO of Standard Chartered Bank Kenya, commented, “We are enthusiastic about this partnership with Safaricom as it positions Kenya as a regional leader in inclusive and responsible investment, reflecting the growing interest in sustainable finance products and climate initiatives.”
The KES 15 billion loan comes with the potential to expand to KES 20 billion through an accordion mechanism, further highlighting the confidence placed in Safaricom’s commitment to ESG goals and the company’s stellar sustainability track record.
This landmark financial transaction represents a significant step forward for Safaricom and East Africa as a whole, demonstrating the region’s growing dedication to sustainable finance products and responsible investment practices. It sets a compelling precedent for other companies and organizations to follow suit in aligning their financial strategies with their sustainability objectives.
Photo Source: Google
3rd September ,2023
By: Delino Gayweh
Serrari Financial Analyst
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