Nigeria set to tap into climate bonds for development

Nigeria, in partnership with issuers and institutional investors including Climate Bond Initiative, is set to tap into the opportunities provided by a thriving Green Bond market with the Securities and Exchange Commission (SEC), making commitment to formally approve guidelines for the new market.

Climate Bond Initiative is an investor-focused, not-for-profit international organisation whose mandate is to solely mobilize the about $100 trillion bond market fund for climate change solutions.

Increased demand drove global Green Bond issuance to a record $155.5 billion in 2017, even as 37 countries from all continents have issued over 1,500 Green Bonds which represent 78 per cent growth from 2016 level.

At the launch of the “Nigerian Green Bond Market Development programme,” over the weekend, Ms Justine Leigh-Bell, Director of Market Development Climate Bond Initiative, said the underlying principles of the issuance are: transparency, management of proceeds, appropriate reporting and independent verification of projects.

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Green Bonds are fixed income (FI) liquid financial instruments used to raise funds dedicated to climate mitigation, adaption and other environment-friendly projects. They provide investors with an attractive investment proposition and an opportunity to support environmentally and socially sound projects.

Governments, states, municipals and corporates can issue Green Bonds while individuals, companies and institutional investors can invest in Green Bond.

The Securities and Exchange Commission (SEC) will any moment from now formally approve the rules for Nigeria’s Green Bond market, Mary Uduk, acting Director-General, SEC, said at the event attended by many key public and private sector players.

“Green Bonds will help deepen the Nigerian capital market. The opportunities have positive impact on the economy. We are engaging other development partners to help us build internal capacity that will help reduce regulatory turnaround time. The Green Bond issuance comes under the purview of the SEC. I want to believe that it will not be difficult. I don’t think Nigeria will find it difficult to develop the Green Bond market. I also want to believe that when it comes to disclosure, all it must be done well,” Uduk said.

Leigh-Bell said there are currently 239 different issuers and 146 new issuers of Green Bond, adding that, “Nigeria is among the countries that have done something nice about Green Bond.

“There is so much to learn because globally, we are not meeting demand. I can honestly say that I see more coming out of Nigeria because transparency, management of proceeds, reporting, independent verification, green definition have all been captured in this whole process.

“What we are offering is trust. It is all about new economic reality in development agenda. It is all about Nigeria building its future in a sustainable way. Transparency is the selling point in Green Bond market both on the side of the issuer or investor,” Leigh-Bell told the teeming audience at the launch.

“I am surprised with the sophistication of Nigeria capital market structure. We saw the need to engage stakeholders and the community on Green Bond market development and find out what their concerns are and the opportunities. But the reality is that whether developed, developing or emerging economies, every country in the world is facing climate change,” Leigh-Bell noted.