Thursday, June 06, 2019 / 11.00AM / Bukola Akinyele for Proshare WebTV / Header Image Credit: @
At a recent workshop organized by the FMDQ OTC exchange in partnership with Climate Bonds Initiative for Capital Market Correspondents in Nigeria, WebTV interviewed, Mr.Olumide Lala, Africa Programme Manager, CBI on his perspectives on the value of Green Bonds and its purpose for the Nigerian Economy.
You have just facilitated a training programme on “Demystifying Green Bonds” for Capital Market Correspondents in Nigeria. Can you give us further insight into the purpose of the Workshop?
Olumide Lala: When you think about the Market we are trying to build (and it is a market, not a product) contrary to what some people say when you say something is defaulted you send the wrong message to the investment community and it starts to work. Especially in an environment where we are quite suspicious about new things you are in danger of killing a good initiative through bad information.
Capital markets are where large sums of money are required to move the investment community towards investing in this type of assets to achieve what we are trying to do.
If we can connect the NDC’s to the real economy in Nigeria like most developing economies, it’s very difficult to find large projects that you can throw 50 to 60 million dollars.
The investment community, the issuers would probably not get out of bed for anything below a certain amount of money.
N15bn which is being talked about by the Federal Government is in the right direction but when you think about the enormity of challenges faced today in transportation, waste management and in energy especially they require real financing.
An industrial nation requires a thousand megawatts per million people to develop. If we look to off-grid opportunities, then you begin to see where we can invest in green assets that will generate revenue for investment opportunities, and will also have a positive impact on the lives of every one of us.
Just think for a second if you had light every time you go home; you don’t have to worry about where the generator is the noise pollution you don’t have to worry about diesel. You do not worry about your kids spending more time in the evening doing their homework in relative comfort as they get better grades. We can have all our street lights up, crime will go down, and that is just one sector, which is energy, transportation; the mass movement of people is another sector. If we start developing different parts of Nigeria, our congested urban cities will be less worrying.
What Will Capital Market Correspondents Derive From This Workshop
Olumide Lala: As capital market reporters and in the consciousness of the capital market, you need to start asking the investors why are you not investing in green assets. Concerning issuers, you need to ask whether they are bringing to the market what investors want to see, and in respect to regulators, you need to ask how they are safeguarding our market to ensure that they penalize bad behaviour and start rewarding sound and safe green investment.
It cuts across the entire gamut of markets, whether it is FMDQ or Nigeria Stock Exchange (NSE) what incentive are Exchanges giving investors to issue green bonds?
SEC will have to ensure that it is building a conducive environment to ensure that the pillars of green investment are protected and people are accountable for the money they take from investors and that borrowers report effectively, adequately and on time.
How Will The Coming of The Green Bond Affect The Landscape In Terms of the Stock Market and The Economy and How Easily Accessible is This Green Bond Funding
Olumide Lala: In terms of the market, we are fast running out of investment headroom, we are investing in treasury bonds, and corporate bonds for some time. The green bond initiative is an opportunity for corporates, to utilize Special Purpose Vehicles, SPVs, to start issuing bonds to finance projects.
When we start investing in green assets, the capital market will grow. The opportunity for investment is there; our pension funds are investing in long-term sustainable assets which will benefit the economy globally, it will create more jobs, it will create more wealth, and infrastructure development beyond just roads. For instance, housing construction in some other climes, attract mortgage finance of 25 to 30 years, which doesn’t exist in Nigeria currently.
If we have access to a mortgage over a lifetime it will get us onto the housing ladder; if public transportation is well funded there is no need to drive a car, people would rather go by public transport in comfort. If people have a regular power supply, they don’t need to worry about generators and noise pollution.
The impact is massive; it’s just mind-blogging for people, and it will change the way we do business and the impact on our society as a whole.