Nigeria will issue her long awaited green bonds next week, making her the fourth country in the world to do so. N10.7 billion worth of bonds will be issued as part of a N150 billion shelf programme. The bonds were to have been issued in the second half of the year, but this was shifted due to the late passage of the 2017 budget.
About the bonds
The bonds are part of the government’s Economic Recovery and Growth Plan (ERGP). Projects funded by the bond are expected to create at least 10 million jobs by 2020. Nigeria will be the first emerging country in Sub—Saharan Africa to issue green bonds. Projects to be funded by the bond include a mass transit scheme, solar street lights, and a railway system that has the option of running with electricity.
The bond are also part of initiatives aimed at moderating climate change. ChapelHill Denham is the lead financial adviser to the Federal Government on the bond issue.
Nigeria has had to ramp borrowing in order to meet capital expenditure needs. Crude oil revenue which is the dominant source of income for the government, fell massively last year due to a drop in crude oil prices and production volumes in the country.
What is a green bond?
A green bond is a fixed income instrument for the purpose of raising debt capital. In addition, it specifies that proceeds of the bond will be used for ‘green’ or environmentally friendly purposes. The first green bond was issued by the European Investment Bank (EIB) in 2007 and it raised $400 million.
The Climate Bond Initiative in 2009 issued the green bond principles which have been adopted as a benchmark for the definition of green projects. Globally, over $31 billion worth of green bonds have been issued since 2007.
