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Green Bond Issuance Will Finance Nigeria’s Green Economy - Mary Uduk, Ag DG SEC Nigeria

Regulators	4863 VIEWS
Regulators
4863 VIEWS

Monday December 10, 2018 7.15AM / SEC Nigeria

In December of 2017, Nigeria joined Poland, France and Fiji in issuing a sovereign green bond, making it the 1st in Africa and the 4th in the world. The proceeds of the bond are to be used to provide green electricity to rural communities that had been in darkness, energize education, and support a government afforestation initiative.

DNV GL Norway, a global verification and sustainability group, reviewed the green credentials of each initiative before endorsing the use of bond proceeds for the projects, which come under the Ministries of Power and Environment.

The London-based Climate Bonds Initiative also granted certification, confirming its alignment with the 2-degree global warming limit in the Paris Agreement. This was the first of four sovereign green bonds to be granted the CBI’s best practice distinction.

Listed on both the Nigerian Stock Exchange and the FMDQ Securities Exchange, the first $10m tranche of the green bond program received a GB1 (excellent) rating from Moody’s.

The objectives of the bond issuance by the sovereign authority include the provision of funds for important projects towards protecting the environment and reversing the harmful effects of climate change, signal the commitment of the Government to protect the environment and lead citizens to take climate change seriously, and create a benchmark for subsequent issuances by state governments and corporates for financing environmental projects.

Whilst all of this is laudable, the biggest opportunity, to my mind, which green bond issuances will present, is the potential to solve Nigeria’s infrastructural deficits, improve agriculture and alleviate poverty while also protecting the environment. – a multi-faceted strategy.

The effects of climate change, for instance, have also been felt in our nation – desertification in the north, migrations of population down south, deforestation in the south, erosion in the south east, flooding of food vegetation, rising sea levels in the coastal areas, oil pollution in the Niger Delta, and many more examples; all pointing to the fact that our infrastructural projects must now take into account the impact on environment, going forward.

Fortunately, the layout of the country, with respect to economic zones, has given a backdrop against which socially responsible projects must now be considered. The infrastructure deficit is expected to hit $878billion by 2040, depending on what statistics you subscribe to.

The future holds opportunities for renewable energy, energy efficiency, infrastructure, food, agriculture and land use, the task ahead now is to ensure that funds are channeled to green projects with multiple social merits. The benefits are clear for all to see – to the issuer(s), to the reputational and economic gains of Nigeria, to the investor(s), and certainly to the growth of our financial markets.

On its part the Commission will continue to promote an active enabling environment for the issuance of these instruments by qualified entities.

A few days ago, the Commission launched the Green Bond Issuance Rules, after various interfaces with stakeholders across the value spectrum. It also played a vital role in the issuance of Nigeria’s pioneer issuance, and continues to advise the Ministry of the Environment and the Debt Management Office.

The Commission is committed to providing enabling processes that meets international best practice in Green Bond issuance in Nigeria. We are already building capacity in collaboration with CBI and other experts among Staff and the Market towards ensuring the sustenance of quality in both issuance and regulation