FG to deepen capital market with N20bn Green Bond

The Federal Government has said the launch of Africa’s first Sovereign Green Bond was a good step towards deepening the Nigerian Capital market.

Speaking at the Green Bonds Capital Market & Investors Conference in Lagos at the Nigerian Stock Exchange (NSE), Acting President, Yemi Osinbajo said launching of Africa’s first Sovereign Green Bond will be a brand new addition to the Nigerian capital market instruments funding portfolio.

Issuance of the first N20 billion sovereign green bond, which would commence in April 2017, according to Osinbajo, would be used to fund projects to reduce carbon emissions and develop renewable energy in the country, while adding that it would tap into local and international investors.

Speaking further, the Acting President said the projects that will benefit from the Green Bond were Solar Unit Distribution Programme (SUDIP), Renewable Energy Micro-Utilities, Energising Education Program (EEP), FCT Bus Rapid Transport and Afforestation Programme.

“Power has posed a major challenge and barrier to effective learning institutional operation and student residences in our universities; this programme would improve access to power to 37 federal universities and seven university teaching hospitals across the country.

“It would also impact the residents of surrounding communities in the total of about 1.110 million people. In total, 119 megawatt of power would be provided in this scheme, out of which 60 megawatt would be solar power,” he said.

Also speaking at the conference, Minister of Environment, Amina Mohammed explained that the Green Bond process was an attempt by the environment sector to contribute to the current administration’s efforts to diversify the economy, create jobs, improve security, provide a framework for sustainable development and deliver on the Paris Agreement.

She affirmed that, the Ministry of Environment would be part of the issuance process, while stressing that the ministry has provided the framework and guidelines, produced as part of the establishing processes essential to ensure that projects funded by green bonds have climate credentials.

During his presentation, NSE’s Executive Director, Capital Markets, Haruna Jalo, noted NSE was committed to environmental sustainability and climate adaption, just as it would facilitate issuers access to ‘deep pool of Green Capital’, while adding that the Nigerian Bourse supported the listing and trading of products that fosters innovation and sustainable investing.

He added that subscribing to the Green Bond, investors would have the benefits of a balanced risk-adjusted financial return with environmental benefits, satisfied ESG requirements and green investment mandates as well as improved risk assessment in an otherwise opaque fixed income market through use of proceeds reporting, among other benefits.

On the benefits to Issuers, Jalo noted that the Green Bond would improve diversification of bond issuers investors base, potentially reducing exposure to bond demand fluctuations, enhance Issuers credibility of sustainable strategy, lower bond volatility in secondary market as a result of more ‘buy and hold’ investors for Green Bond.