Green Financing for Sustainable Development in Infrastructure Projects in Kenya

PhD Dr. Amolo Elvis Juma Amolo
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PhD Dr. Amolo Elvis Juma Amolo: Lecturer, University of Kigali, Rwanda

International Journal of Research and Scientific Innovation, 2024, vol. 11, issue 8, 420-426

Abstract: Transitioning into a decarbonized economy requires an unprecedented level of new capital investment, particularly in the form of green finance. Market and regulatory trends indicate that there is an increased interest in green and sustainable finance among investors and policymakers. However, capital mobilization for green investments has been constrained by microeconomic obstacles including maturity mismatches between long-term green investments; the typically short-term time horizons of investors and disintegrated financial and environmental policy approaches. It’s against this backdrop that the study intended to assess the green finance trends, green finance instruments and the challenges on green finance adoption.The study adopted desk review also known as Meta-analysis method to extract information concerning green finance trends, instruments and adoption challenges. The study established that to achieve sustainable development goals (SDGs), its necessary to open-up green projects and scale up the financing of investments that provide environmental benefits through innovative financial instruments and new policies such as green bonds, green banks, carbon market instruments, fiscal policy, green central banking, financial technologies and community-based green funds. However, Financial institutions show more interest in fossil fuel projects than green projects because of the low returns and risks associated with green investment compared to brown investment. To reduce the risk of green investment and increase the rate of return to the investors, the creation of green credit guarantee schemes and tax return on revenue generated from the green energy spillover effect is necessary. In conclusion green finance market is well structured in developed economies unlike developing economies due to underdeveloped capital markets, regulatory gaps and unstandardized green taxonomy.Thus the study recommends the development of green finance database and incorporation of green agenda in public policy institutions’ mandates and procurement;Standardization and information disclosure regarding Green investment risks, green taxonomy and commoditization of environmental factors into tradable assets; Raising awareness; Offering tax incentive on green projects; Developing Carbon Capital Markets; Stock Trading of Green finance products; Strengthen the social responsibilities of investors and Technology adoption.

Date: 2024
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