Increased Sukuk, Green Bond investments’ll grow economy — Experts

Some capital market operators and regulators say socially responsible investments like Sukuk and Green Bonds have the potential to grow the country’s economy.

They expressed the view at the Nigerian Exchange (NGX) Limited virtual retail investor coverage, held in partnership with APT Securities and Funds Ltd. in Lagos, on Tuesday.

The webinar was on “Sukuk and Green Bonds: More than Just Investing.”

The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, said that the non-interest and socially responsible investments were full of potential and uniqueness to deepen the financial system of the economy.

Yuguda, who was represented by Mr Abdulkabir Abbas, Head of Department, Securities and Investment Services, SEC, said that the capital market was characterised with adequate funding offerings for trading and portfolio diversification among others.

He said Sukuk, Green Bond, stocks, among others, provided an alternative means for resource mobilisation, equitable means of resources that could help address financial exclusion and alleviate poverty through job creation.

“The SEC has adopted the Nigerian Sustainable Finance Principle, as proposed by the Financial Services Regulatory Committee, which is a vital step to achieving a sustainable global economy.

“The objective of the NSFP is to stimulate a competitive and sustainable capital market, improve corporate governance practices, nurture an environment that creates jobs and an effort to tackling global warming.

“This further requires us to increase our investor awareness programmes and protection services in order to maintain the development in the sector,” he said.

The Team Lead, Securities Issuance Unit, Debt Management Office (DMO), Mr. Mohammed Adamu, said that despite the increase in Green Bond subscriptions globally, it still constituted about one per cent of the bonds issuance market.

Adamu described Green Bonds as a structured financial activity that had been created to ensure a better environmental outcome.

He said, “Despite the uncertainties of life in 2020, green bond increased from 266 billion dollars in 2019 to 269 billion dollars in 2020.

“Green bonds still constitute about one per cent of the outstanding bond market issuance, so the market is still a fraction of the total global market.

“So, there is still a lot to be done and a lot of space for issuance of green bonds,” he said.

In his opening remarks, the Chief Executive Officer, NGX, Mr Temi Popoola said that Sukuk and Green Bonds had gained prominence in the last three years as one of the safest investment portfolios.

Popoola said that the webinar was to equip retail investors with the necessary skill to fully manage and grow financial resources at their disposal through investment opportunities available in the capital market.

“In the last three years, Sukuk and Green bonds have gained prominence as some of the safest investment portfolios; according to fixed rating, Sukuk issuance increased by 13 per cent Year-on-Year to 118 billion dollars at the end of Q4 of 2020, of which about 35 per cent is estimated between 2021 and 2023.

“Furthermore, Sukuk supply is expected to rise in 2021 after a strong run in Q2 of 2021 supported by strong investor appetite and issuer funding diversification needs.

“From an economic perspective, Sukuk continues to play a critical role in infrastructure financing and funding for health, education and sustainable development which has brought significant impact for many nations globally,” he said.

Popoola said that the potential for Sukuk and Green bonds remain immense and likely to expand over the years.

The Managing Director, APT Securities and Funds Limited, Malam Garba Kurfi, urged retail investors to take advantage of the immense opportunities in the capital market.

Kurfi said that with technological advancement, retail investors could access the capital market and trade online using their mobile phones.

He said that they could also use other interment enabled devices, with the assistance of securities houses for proper guidance.

At a panel session, other stakeholders highlighted the potential of Sukuk and Green Bonds to engender infrastructure development in the country.

The NGX has consistently held educational programmes focused on building capacity and growing the market, with the aim of deepening retail investment.