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Republic of Benin’s trailblazing €500m 12,5-Y inaugural issuance under its new SDG Bond Framework

11-minute read


On July 15th, 2021 Benin successfully launched its inaugural Sustainable Development Goals Bond (“SDG Bond € 500 million 12.5 years”). It represents a landmark transaction in the emerging market space as this was the first SDG issuance from an African sovereign. Natixis acted as Joint Sustainability Structuring Adviser of the SDG Framework[1] and Joint Bookrunner on the inaugural transaction.


Transaction highlights

To take advantage of a favorable market window and get ahead of any competitive supply, the issuer announced the EUR SDG mandate on Monday July 12th. The series of virtual meetings involved more than 60 European and US investors. The issuance was launched on the 15th of July 2021 with a size being set at 500 million and the final yield of 5.25%. The orderbook peaked above 1.2 billion euros.

The Benin’s issuance opened a new page in the history of the Sustainable finance / SDG finance in Africa and represents a key milestone for the issuer in the primary capital markets:

  • Pricing of new notes inside existing EUR curve (with an estimated greenium of 20 bps)
  • Broadening and diversification of issuer’s investor base

This inaugural € 500 million 12.5-year transaction (maturing on the 22nd of January 2035), was issued at a coupon rate of 4.95%. A significant share of the bond (~91%) was allocated to investors with sustainable investment strategies (i.e. incorporating ESG criteria in their investments) according to Natixis’ proprietary methodology[2].


Format and Second Party Opinion

From a format standpoint, it is an ICMA Sustainability Bond. The Framework is aligned with the most recent Sustainability Bond Guidelines (2021 edition). The contribution to sustainability has been assessed as “advanced” by Moody’s VE, therefore obtaining the highest possible score and matching market “best practices”. Expected impacts are deemed “advanced” and ESG risks management “robust”[3] by the SPO provider.


SDG features of the Bond/Program

On top of ticking sustainable finance best practices, Benin’s Framework displays additional features that enable to designate it as an “SDG Bond”. Bear in mind there is no canonical definition of what an SDG Bond means. There is a vast array of SDG finance practices, some remaining superficial or unsophisticated. It a rule of thumb from market participants.

That being said, the 2030 Agenda and the SDGs embed key characteristics, notably in terms of multi-stakeholders governance, context-based analysis reflecting national situations and priorities, efforts to prioritize the most enabling and pressing targets, long-term planning and public policies consistency enhancement, attention paid to vulnerable population as well as positive and negative interlinkages effects. The 2030 Agenda also relies on an ecosystem of public official statistics, cooperation with international organizations and donors, and of course, accountability mechanisms with events like the High-level Political Forum for Sustainable Development, which is the United Nations forum for the global follow-up of the implementation of the 2030 Agenda. When a Bond Program mirror or incorporate such characteristics, it can legitimately be called an SDG Bond.


7 features deserve to be highlighted regarding Benin’s SDG Bond Framework:

  1. Based on the prioritization of the most pressing SDG targets and on an analysis of the total cost to achieve them carried with international organizations;
  2. Sophisticated process to evaluate and select expenditures based on their "SDG sensitivity";
  3. The eligibility of different nature of expenses with a string of conditions;
  4. A total of 12 overarching eligible categories enriched with rationale clarifying the context of intervention and reasoning behind the criteria and expense perimeter;
  5. Granular target populations thoroughly defined and bespoke to Benin’s context;
  6. A comprehensive list of theme-based and sectoral exclusions with a particular focus on conservation of biodiversity;
  7. The first of this kind partnership with the Sustainable Development Solutions Network (SDSN) creating a unique feedback-loop and content to feed impact reporting;


We thereafter propose to dig into each of them.


1. Based on the prioritization of the most pressing SDG targets (49 ones identified) and on an analysis of the total cost to achieve them carried with the IMF, the UNDP, and the German cooperation (GIZ)[4]. The SDG costing methodology used by Benin includes 3 main steps;

         i. Identifying bottlenecks in the way of achieving the SDGs (particularly those SDGs whose achievement would have major contribution           to other goals);

        ii. Identifying accelerators that can eliminate bottlenecks;

       iii. Evaluating the cost of implementing these actions.

For the period 2021-2025, the cost of accelerating measures for achieving the SDGs has been assessed at 18 billion euros. Around 40% of this total amount is to be covered exclusively by the national budget, highlighting the need to attract private capital and maximize multilateral funding. Through the cutting-edge transparency provided through this SDG Bond Framework, one expects an indirect multiplier /leverage effect with increased blended finance flows and private investments.


2. Sophisticated process to evaluate and select expenditures based on their SDG sensitivity. Such process is anchored into a thorough screening of budget lines to assess their actual contribution to SDG gaps narrowing. In addition to detailed eligibility criteria (see infra), expenses will be sorted out based on various lenses, among which:

            i. Falling into the classification of “priority social spending” defined jointly with the IMF[5]

           ii. Their SDG coloration index (according to a sensitivity analysis of all Ministries’ individual annual work plans, based on criteria                         related to effectiveness, interrelationships, respect of the “no one left behind principle”, geographical impacts).


3. The eligibility of different nature of expenses with a string of conditionsin the context of emerging countries, public services are engines of social and economic betterment. Public administrations are key enablers of such public services and incur operating and personal expenses. Therefore, making eligible only CAPEX/infrastructures expenses would be biased and too narrow, ignoring the reality of SDG advancement. However, in Benin Framework, the decision has been made to circumvent the eligibility of operating and personnel expenses to the epitome of welfare government: education and health. Solely personnel costs for teachers and doctors, midwives and state nurses are eligible, as well as operating costs for the Ministries of Health and Education (maintenance, office supplies and equipment’s). Meanwhile, public investment expenditures are eligible when falling into the categories of eligible expenditures (e.g. expenses devoted to infrastructures, building schools, hospitals, water, and low-carbon electricity supply networks, zero emission transportation and ICT infrastructures). Current transfers and subsidy expenditures are also eligible (scholarships fees, payment for care of the indigent using emergency funds, support to school, etc.)

[1] Benin SDG Framework available here.

[2] 69% of the bond was allocated to “advanced investors” (i.e. dedicated green and/or sustainable bond funds and/or mandates); 22% of the bond was allocated to “engaged investors” (i.e. that incorporate ESG criteria in their investment decisions); 4% of the bond was allocated to “committed investors” (i.e. Principles for Responsible Investment signatories, but not truly active players in the broader Responsible Investment market).

[3] Vigeo Eiris second party opinion available here.

[4] Benin was selected in 2018 to participate in the joint International Monetary Fund-United Nations pilot costing program on the assessment of financing needs for the achievement of the SDGs, alongside 5 other countries around the world.

[5] International Monetary Fund, Report No. 19/203, June 2019, p. 77, item 25 available here. This spending is directed towards education (three ministries tied to educational issues in Benin), social insurance, social assistance, health, social affairs, living environment, hygiene, sanitation and agriculture.


4. A total of 12 overarching eligible categories enriched with individual rationale clarifying the context of intervention and reasoning behind the criteria and expense perimeter. Rationale rely on literature about development economics and sustainable finance in emerging countries, social or environmental standards (World Bank standards, United Nations Development Programme). The commitment of the Republic to the preservation and enhancement of its architectural and natural heritage treasures (e.g. rehabilitation of the historic city of Abomey, preservation of the sacred forest of Kpassè Zoun in Ouidah) is noticeable since no African state had previously linked heritage preservation and education in his external financing programme.

The eligible expenditures are classified according to the four pillars of Benin's national development plans: population, prosperity, planet and partnerships. 

The four pillars  (4P) of the 2018 – 2025 National Development Plan and the corresponding SDGs

Pillar #1: Population

Details & Sub-categories

Green categories   |   Social categories

1. Development of sustainable & productive agriculture

  • Measures to support and/or strengthen subsistence farming by improving connectivity and opening-up, development of arable land, improved irrigation, facilitating the establishment of new farmers
  • Extend warning and management systems for climate disasters affecting the agricultural sector (floods, hurricanes, etc.)
  • Finance agricultural insurance mechanisms and disaster management systems for farmers

2. Access to drinking water & wastewater processing

  • Construction, operation, maintenance of infrastructure that increases production, transportation & water processing and storage capacities
  • Creation of low-cost connections to drinking water for low-income households
  • Construction of hydraulic infrastructure for farmland not used for animal breeding (irrigation, water supply, drainage, wastewater drainage, flood control installations)

3. Improving the health of all

  • Development and/or extension of social protection mechanisms allowing free health care professionals consultation (general practitioners, specialists) and access to the related treatments (e.g. free malaria care for pregnant women and children under 5)
  • Training expenditures and/or remuneration of health care personnel, doctors, midwives, and state nurses
  • Development and upgrading of health care facilities (hospitals, palliative care units, university health centers, acquisition of equipment, including scanners and imaging equipment) and care for populations that have been excluded or distant from the health care system (e.g. end of life care for the elderly)  
  • Financing of dispensaries, health centers, maternity wards, housing for health care workers

4. Decent housing for the poor

  • Construction of housing units that allow for safe and decent occupation (access to electricity, drinking water, collective sewage, minimum m2 surface area per habitant, minimum lighting, ventilation, no humidity and safe construction)
  • (Re)housing of populations living in informal accommodation (public financing of rents and/or organizations responsible for assigning units in social housing and managing those units)

5. Expanding education services and improving the capacity to take on students

  • Maintenance and/or rehabilitation expenditures for public schools and universities
  • Construction of schools and universities equipped with cutting edge equipment to stimulate scientific and technical sectors in particular[6]
  • Personnel expenditures (payroll and acquisition costs of goods and services) for teachers and teaching teams
  • Current transfers and subsidies financing student scholarships (social and/or merit-based), allowances for teachers, payment of school fees, free school meal programmes, purchase of schoolbooks)

[6] Danish Ministry for Foreign Affairs (DANIDA) & Agence française de développement (AFD), Mid-Stage Evaluation of the 10-year plan for the development of the Beninese education sector (PDDSE 2006-2015), February 2012, available here.

Pillar #2: Prosperity

Green categories   |   Social categories

Overarching eligible categories

6. Access to low-carbon, reliable and affordable energy

  • Construction of solar power plants and onshore/offshore windfarms
  • Programmes for the electrification (connection to the national distribution network) of urban and rural communities depending on distance from the conventional grid, electrification rate and change in the electric mix[7]
  • Development of mini/off grid networks for populations located more than 10km away from the conventional network supplied by a renewable source of electricity

7. Connectivity and digital inclusion throughout the territory

  • Extend the broadband networks, particularly in rural areas
  • Enhance the quality of educational services provided by the public education system and expand capacity by using digital technology
  • Generalize e-services and the digitalization of public administration
  • Programs for deploying digital tools for training purposes and collaboration between teachers and students to broaden their operational skills
  • Digital infrastructures for financial inclusion and entrepreneurial development

8. Supporting employment and financial inclusion of the youth, women, and rural entrepreneurs

  • Development and support, and/or funding of training leading to qualifications, for the full integration of young workers
  • Support expenditures for small- and medium-sized companies employing young workers through measures facilitating access to bank financing and micro-credit, as well as tax incentives
  • Financial endowment for microfinance for the empowerment of vulnerable populations (women, landlocked rural populations)

[7] Expenditures for connection to the national distribution network are eligible when the following three criteria are cumulatively met: i) communities targeted for the connection are located less than 10 km away from the conventional grid; ii) these communities have an electricity access rate of less than 50% for urban communities and less than 10% for rural communities; iii) The share of renewable energy in the country’s electricity mix (expressed in %) must be on the following trajectory: share equal to or greater than 1% in 2020 and 2021, 3% in 2022, 8% in 2023 and 2024 and 10% from 2025 This last criterion guarantees connection to a network whose the electricity distributed through it has a carbon intensity that regularly improves. It is based on the statistics included in “2016 – 2020 key figures, energy assessment and indicators” from the General Directorate for Energy Resources, p.11.

Pillar #3: Planet

Green categories   | Social categories

Overarching eligible categories

9. Developing living environments and sustainable infrastructure for all

  • Rehabilitation of unsanitary areas and neighborhoods
  • Sustainable development of common areas for commercial, recreational and leisure purposes
  • Waste prevention, reduction, reuse and recycling systems and/or equipment (excluding incineration, landfilling and dumping) ●                              
  • Infrastructure and equipment for modes of transports operating without direct greenhouse gas emissions[8]

10. Conservation of lake and coastal areas, reasonable economic exploitation of coastlines

  • Programs to combat coastline erosion in urban and rural coastal areas in southern Benin
  • Rehabilitation and conservation of coastal ecosystems providing eco-systemic services, such as mangroves
  • Financing of community infrastructures for the development of artisanal fishing industries in South Benin[9]

11. Conservation of biodiversity, restoration & reasonable exploitation of the forest cover and fighting against desertification

  • Reforestation initiatives that include the population in the enhancement and exploitation of natural forest ecosystems
  • Agroforestry programmes and the development of local non-timber processing and enhancement chains[10]
  • Reforestation programs using indigenous species to combat soil erosion and desertification

[8] Only transport methods with no direct emissions (i.e., zero tailpipe emissions) are eligible.

[9] A water surveillance team was created to ensure the rational and sustainable use of aquatic ecosystems and to ensure compliance with the law of 7 August 2014 on fishing and aquaculture in the Republic of Benin.

[10] Benin has a program with the International Tropical Forest Organization so that it may certify the National Forest Office’s plantations. A certification process is in progress (Forestry Stewardship Council step 5 out of 7).

Pillar #4: Partnerships

Green categories   | Social categories

Overarching eligible categories

12. Promoting heritage sites, educational sites, & entertainment infrastructure

  • Programs and initiatives for the rehabilitation of heritage assets shared both by the Beninese who visit them (local and experiential tourism) and culturally, for the groups who keep the heritage alive and maintain it
  • Develop open heritage sites that allow for cultural education and reappropriation by young Beninese of traditional cultures of Benin


5. Granular target populations thoroughly defined. The end-beneficiaries of eligible expenses are bespoke to Benin's context (see the table below).

1. Development of sustainable and productive agriculture

  • Youth, and in particular first-time entrants onto farmland
  • Small food producers
  • Foodstuff merchants
  • Farming cooperatives

2. Access to drinking water and wastewater processing

  • Populations living in informal accommodations and/or rural areas
  • Populations deprived of a functioning water point
  • Populations (rural in particular) that are not connected to wastewater drainage and management networks

3. Improving the health of all

  • Sick beneficiaries in Benin’s 77 municipalities
  • Individuals suffering from chronic or acute illnesses
  • Young girls and women whose access to sexual and reproductive health services is limited
  • All patients in the hospital systems and the elderly who are distant from the conventional health care system
  • Health care personnel

4. Decent housing for the poor

  • People living in overpopulated and/or informal housing
  • People living in housing exposed to natural hazards (ingress, humidity, submersion)
  • Poor populations (in terms of living conditions and money)

5. Expanding education services and improving the capacity to take on students

  • Beninese students in primary or higher education, with particular focus on the enrolment of children from low-income families and, still more, young girls

6. Access to low-carbon, reliable and affordable energy

  • Entire Beninese population, but in particular habitants who live in the countryside who are poorly connected to the conventional electricity grid (in the North of Benin, mostly)

7. Connectivity and digital inclusion throughout the territory

  • Rural and urban Beninese population that is not (or not very) connected to the internet
  • Students at various levels of instruction in Benin

8. Supporting employment and financial inclusion of the youth, women, and rural entrepreneurs

  • Young workers in the process of entering the job market
  • Young unemployed graduates
  • Female entrepreneurs
  • Entrepreneurs from rural areas running SMEs/ETIs

9. Developing living environments and sustainable infrastructure for all

  • The whole Beninese population and in particular the inhabitants of areas concerned by purification and affected by the direct and indirect effects of construction sites
  • Informal traders in Beninese markets and unconnected Beninese entrepreneurs
  • People living urban centres

10. Conservation of lake and coastal areas, reasonable economic exploitation of coastlines

  • Coastal populations of South Benin, particularly those next to lake or coastal areas with mangroves and fishermen population shaving developed artisanal fishing activities

11. Conservation of biodiversity, restoration and reasonable exploitation of the forest cover and fighting against desertification

  • Rural and urban populations in close proximity (less than 15 km) to forest systems
  • Small-scale farmers seeking access to land

12. Promoting heritage sites, educational sites, and entertainment infrastructure

  • Entire Beninese population, and particularly the young and people living in the vicinity of rehabilitated and promoted remarkable sites


6. A comprehensive list of theme-based and sectoral exclusions with a particular focus on conservation of biodiversity.  The Framework encompasses a set of stringent exclusions criteria. The exclusion of any project involving the deforestation of primary forests, modified natural forests or mangroves is notable. Fossil fuels in all their forms are excluded (solid, liquid, gaseous). Red meat sector relates activities are excluded. In some instances, exclusion policies are more demanding than development finance institutions’ requirements (e.g. population displacement).


7. The first of this kind partnership with the Sustainable Development Solutions Network (SDSN) creating a unique feedback-loop and feeding impact reporting. This collaboration with the SDSN chaired by Pr. Jeffrey Sachs is a first in sub-Saharan Africa[11]. The SDSN will conduct an evaluation of Benin’s situation vis-à-vis the SDGs, the progress made and trends in filling SDG gaps. It will provide the Government of Benin with an in-depth analysis of the country’s comparative SDG performance with peers, to compare this performance with the country's public policies and ambitions and aims to support its efforts to incorporate the SDGs into Benin’s budgetary and fiscal framework. Such input will create a feedback loop to take stock of progress and adjust the selection of eligible expenses on an ongoing basis. The SDSN's observations will guide Benin's SDG Bond Steering Committee in adjusting/reweighting Use-of-Proceeds selection to maximize impacts. The independent and authoritative assessment of Benin’s efforts will feed impact reporting and be shared with investors. Finally, a comprehensive sample of outcome and impact indicators is provided as well as a list of international and institutional cooperation initiatives in statistics.


For Natixis, the structuring of this SDG Bond Framework and this inaugural issuance are a new SDG credential following similar roles played with the Mexican Government (Mexico’s € 750m 7-year inaugural SDG Bond met strong investors’ appetite) and the Group AFD (Success of AFD Group’s €2bn inaugural issuance under its new SDG Bond Framework). We also launched an equity Index on the SDG 6 and 14 (Natixis’ Euronext Water & Ocean Europe 40 Index).

Since the release of a flagship report titled “Solving Sustainable Development Goals Rubik’s Cube”  in 2018, Natixis Green & Sustainable Hub has been very active in this SDG space, and so through various channels: publications, transactions, product creation, but also dialogue with different stakeholders, including the participation in workshops on the French 2030 Agenda Roadmap Elaboration. Recently, Natixis Green & Sustainable Hub has been selected as a technical advisor to accompagny the International Development Finance Club (IDFC) on the operationalization of the SDG and the so-called SDG Finance Alignment. 

[11] Press release on the partnership between the Republic of Benin and SDSN, published July 12th 2021, available here.

To go further:

  • Republic of Benin SDG Bond Framework – available here.
  • Press release of the partnership between the Republic of Benin and SDSN – available here.
  • Vigeo Eiris Second Party Opinion – available here.