FG to issue N20bn Green Bonds in Q1 2017


The Federal government will in the first quarter (Q1) of 2017 raise N20 billion via Green Bond to boost infrastructure, outgoing Minister of Environment Amina Mohammed made this disclosure at the Green Bond Capital Market and Investors Conference held recently on the Nigerian Stock Exchange (NSE).

“The Green Bonds process is an attempt by the Environment sector to contribute to this Administration’s efforts to diversify the economy, create jobs, improve security, provide a framework for Sustainable Development and deliver on the Paris Agreement,” she said.

According to her, under the Paris Agreement, developed countries reaffirmed their commitment to mobilise $100 billion of resources by 2020 to support developing countries ‘enhance the implementation of their policies, strategies, regulations and action plans and their climate change actions with respect to both mitigation and adaptation.

“This objective will remain in place till 2025 and will act as a floor from which flows shall increase beyond 2025. The provision of these resources will be indispensable if Nigeria is to realise its NDC, especially the 45 per cent emissions reduction and the adaptation and resilience building activities,” Mohammed added.

She said the Paris Agreement which was signed by Mr. President enabled Nigeria to develop our Nationally Determined Contribution (NDC) and constitute the Inter-Ministerial Committee on Climate Change charged with the responsibility for cross sectoral integration of Climate Change issues into mainstream planning and also to identify a pipeline of projects which the Green Bonds will fund.

The Minister added that the delivery of Nigeria’s NDC will require a fundamental re-orientation of finance flows within the economy. Capital will need to flow toward low-carbon, climate resilient opportunities and away from carbon intensive, polluting activities or those that exacerbate climate vulnerability leading to poverty, insecurity, reduced health quality etc which the Green Bonds present an opportunity for Nigeria to begin to achieve all the above.

She further affirmed that the process which will see Nigeria launch the first Sovereign Green Bonds in an emerging market began as a seed which was sown by the Private Sector – the Nigerian Stock Exchange – “So you can say we have achieved half the circle and will come full circle when we finally issue the Bonds this quarter,” .

The outgoing Minister said since the Federal Government began this journey it has taken a number of steps to ensure that the country is able to sustain a bigger plan for the inflow of additional funds through subsequent issuances thus beginning the process of attempting to green our economy.

“The Government’s new proposed Economic Recovery and Growth Plan identify the Green Bonds as one of the alternative sources of financing. The Plan also has significant overlaps with our NDCs on objectives for Power, Transport and Agriculture. For instance, In the power sector target includes 13,000 MWs of off grid solar projects; in transport – implementing schemes that reduce the incidence of cars by introducing and encouraging the use of buses.  Attracting climate resources to these interventions expands funding that will be available to our economy,” Mohammed added.

The Minister noted that all these are meant to help Nigeria achieve a target of 450 million tones in emissions reductions.  “Our green bond process contributions to emissions reductions by identifying projects within various sector strategies. We can confidently say that we are able to contribute at least 158,000 tonnes to this target. A small number but a concrete step,” she affirmed.

In the area of job creation, Nigeria anticipates to jobs of at least 10% of the ERGP’s target of 15million jobs by 2020.

She also disclosed that there are 91 global climate funds that have commitments from the global community to provide up $100 billion per annum to fund them. “Finding the meeting point between the ERGP and access these funds is a result the Green Bonds process can facilitate,” the Minister noted.

Executive Director-Capital Markets, NSE,  Haruna Jalo-Waziri,  in his presentation entitled “Green Bonds: The Opportunity for Nigeria” said Nigeria going towards a $1.6Trillion Economy by 2030 and if it should reach its full potential, capital spending on infrastructure  and real estate could rise to $1.5 trillion through 2030.

He said Nigeria’s first Green Bond Issuance is first in Africa and oversubscription is commonplace.

According to Jalo-Waziri, some of the benefits if the Green Bonds for investors include, balance risk-adjusted financial returns with environmental benefits, satisfying ESG requirements and green investment mandates, improving risk assessment in an otherwise opaque fixed income market through use of proceeds reporting.

Other benefits are potential use pure-play, project and ABS to actively hedge against climate policy risks in a portfolio that includes emissions intensive assets and recognised by UNFCCC as non-state actor “climate action”


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