About Nigeria’s Proposed $64 Million ‘Green’ Bond
Nairametrics| The recent success, as the Federal Government (FG) will like to describe it, of the February $500 million Eurobond seems to have instilled confidence in financial policy makers as news of more and more bonds have been coming through. First, it was another proposed $500 million Eurobond, now Acting President Yemi Osinbajo has announced another $64 million ‘green’ bond for April.
He stated this yesterday while addressing participants at the Green Bonds Capital Market & Investors Conference organized by the Federal Ministry of the Environment and the Debt Management Office (DMO) at the Nigerian Stock Exchange (NSE) in Lagos.
All About The Green Bond Conference
The Federal government through the Federal Ministry of Environment, Debt Management Office and Ministry of Environment today held a Green Bond conference at the Nigerian Stock Exchange (NSE). Present at the occasion were outgoing Minister of Environment Amina J Mohammed, Minister of Power, Works and Housing Babatunde Fashola and the Director General of the Debt Management Office (DMO) Abraham Nwankwo.
Acting President, Professor Yemi Osinbajo also gave opening remarks and was present through the first panel discussion.
- The Green bond is part of the federal government’s Economic Recovery and Growth Plan (ERGP).
- The ERGP has a target of creating 15 million jobs by 2020. Projects funded by the bond are expected to create 10% of that target.
- Nigeria will be the first emerging market in sub Saharan Africa to have a green bond.
- Projects to be funded by the green bond will be taken from the 2017 budget.
- The intended amount to be raised from the green bond is 20 billion naira.
The first panel discussion comprised the Ministers for Environment Power Works and Housing, as well as Federal Capital Territory (FCT). They highlighted the various projects that could be funded using green bonds. Namely: mass transit scheme, solar street lights, and a railway system that has the option of running with electricity.
At the second panel discussion, representatives of key regulators namely the Securities and Exchange Commission (SEC) and the Debt Management Office (DMO) gave a broad description of the regulatory framework currently being put in place for green bond issuance.
The last panel discussion comprised potential investors from the International Finance Corporation (IFC), Nigerian Sovereign Investment Authority (NSIA) and the pension industry who stated their willingness to invest in the upcoming green bond.
The outgoing minister of environment, also gave a firm assurance that the green bond programme would continue after her exit to the United nations, this was also echoed by the Minister of State for Environment.
According to reports from Moodys, over $200 billion worth of green bonds have been issued in the past ten years. China has been a key player in the green bond market, with over $36 billion dollars green bond issuances so far. Estimates of potential green bond projects are currently over $700 billion dollars.
What though is a green bond? Simply put, a green bond is just like any other bond Nigeria has issued but with a specific target- the money obtained from the bond is channeled into funding projects that are environmentally friendly or ‘green’, hence the name given to the bond. These ‘green’ projects include renewable energy, clean transportation and sustainable water management.
The benefits of a green bond to the issuer, in addition to accessing more funds, include an enhanced global reputation and commitment to sustainable development. In addition, for mono-economies like Nigeria, green bonds offer a means of channeling funds into other sectors that can drive the nation’s economy.
It is no wonder then, that Osinbajo harped on the boost the Federal Government’s diversification strategy to non-oil sectors would receive from the bond as well as the added benefits of eradicating poverty caused by natural disasters from climate change and deepening the nation’s capital market.