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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
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