FG to float N20bn Green Bond for environmental sustainability projects

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By Peter Egwuatu & Nkiruka Nnorom
Federal Government Thursday said that plans are under way to launch a N20 billion Green Bond in the Nigerian capital market, the first ever in the emerging markets.

The Bond will fund emission projects such as solar power systems and transport so as to achieve environmental sustainability goals of the government.

It will also be used to fund part of the infrastructure projects outlined in the 2017 budget. Typically, a Green Bond enables capital-raising and investments for new and existing projects with environmental benefits.

From left, the SGF, David Babachir; Vice President Yemi Osinbajo and President Muhammadu Buhari at the meeting between the Presidency and Pan Niger Delta Stakeholders on lasting peace in the region at the Aso Chambers, State House, Abuja. Photo by Abayomi ADESHIDA 01/11/2016

Speaking at the Green Bond Capital Market & Investors Conference themed “Green Bonds: Investing in Nigeria’s Sustainable Development” at the Nigerian Stock Exchange, NSE, to herald the launch of the bond in Lagos, the Acting President, Prof. Yemi Osibanjo, described the launch as historic, saying that it signifies an alliance between finance and environment, two sectors in which even a few years ago one would not imagine would speak the same language.

He said the Green Bond would provide an opportunity to deepen the capital market and act as value accretion to the market’s instrument funding portfolios.

“The Green Bond process is an attempt by the Environment sector to contribute to this Administration’s efforts to diversify the economy, create jobs, improve security, provide a framework for Sustainable Development and deliver on the Paris Agreement.

Under the Paris Agreement, developed countries reaffirmed their commitment to mobilise $100 billion by 2020 to support developing countries to enhance the implementation of their climate change actions with respect to both mitigation and adaptation. This objective will remain in place up to 2025,” he stated.

Continuing, he said “A recent World Bank report shows that climate change is an acute threat to poorer people across the world with a capacity to push more than a hundred million people back to the poverty line and the poorest regions of the world, Sub-Saharan Africa and South Asia, will be hit the hardest. The floatation of the Green Bond is one which proceeds will be applied to climate and environmental friendly green projects.”

Earlier in her welcome address, Amina Mohammed, Minister of Environment, reiterated the government’s resolve in diversifying the economy, creating Jobs, improving security and improving quality of life. According to her, Green Bonds provides a new product with new credentials that investors could buy into, which has gone through a vigorous process to ensure transparency, accountability in use of funds and is environmental friendly.

“Our domestic market needs to rally around our own domestic issuance,” she said, adding that the recently issued Euro Bonds are a testament that the Nigerian market is still viable.

“Greening our economy and financial systems will, in the long run, support our sustainability efforts and improve the economy as it will open new avenues for new types of jobs, innovation and skill. Improved partnerships and collaboration with private sector is key and we must continue to encourage it,” Mohammed stated. In a presentation titled, “Introducing Green Bonds: An Opportunity for Nigeria’s Capital Market, Mr. Haruna Jalo-Waziri, Executive Director, NSE, observed that Green Bonds, globally, are usually over-subscribed, and incidence of price volatility is reduced because investors buy to keep.

He explained that asset under management by signatories to UN-supported Principles for Responsible Investment in Green Bonds rose from $4 trillion in 2006 to $60 trillion in 2016, and now stands at $120 trillion.

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