Capital market stakeholders to meet in Lagos as sovereign domestic green bond moves closer to launch
International investors and sustainable finance experts will gather in Lagos this Thursday in a high-profile event which brings Nigeria’s sovereign green bond a step closer.
Initially mooted in May 2016 by Nigerian Environment Minister Amina J Mohammed, and supported by Finance Minister Kemi Adeosun, the Nigerian green bond gained widespread attention after being formally announced by President Buhari at the October 2016 signing of Nigeria’s NDC commitments New York.
Thursday’s Lagos Green Bonds Capital Markets and Investors Conference has now become a significant event, not only to strengthen momentum around the proposed NGN 20bn (USD 63m) domestic issuance, but also in laying down markers for international investors as Nigeria develops its long-term approach to green finance and planning around project pipelines.
Environment Minister Mohammed, who is soon to take up a new appointment as UN Deputy Secretary General, outlined the wider context to Climate Bonds:
“Nigeria is committed to sustainable economic development. The Lagos Event is a concrete step in the process of developing our 2017 sovereign green bonds program.
In Lagos, we are bringing together the institutional investors, banking finance and young social entrepreneurs groups that will ensure this initial bond launch is a success; enabling the development of a green bond market while building our national climate finance capabilities."
This green bond will be the first sovereign issuance from an African nation. The bond has been provisionally earmarked for a range of climate-related initiatives including mass transit, land re-afforestation, remediation and solar projects. These plans reflect the government’s priorities and climate change commitments under Nigeria’s Nationally Determined Contributions (NDC) of the Paris Agreement.
Preparations for the bond launch gathered pace once Minister Mohammed and Finance Minister Kemi Adeosun convened stakeholders in October 2016. That meeting was closely followed by publication of green bond guidelines and project eligibility criteria by the Ministry of Environment, and the inaugural meeting on 12 January of the new formed Green Bonds Advisory Group.
From the outset of the development process the UNEP Inquiry has been providing overall project coordination and support, one facet of their wider program to develop Nigerian finanacial and capital markets.
Extensive support and advice
Sponsors for Thursday’s event include the Nigerian Stock Exchange (NSE), Citi Bank, Chapel Hill Denham while the World Bank and EY are also playing active roles.
The involvement of UNEP Inquiry, NSE and international finance organisations is another indicator of the longer-term climate finance objectives that lie behind this issuance.
"A sovereign green bond represents a new stage in the development of Nigerian capital markets and opens the way for further corporate issuance and international investment” says Nigerian Stock Exchange CEO Oscar N. Onyema.
“The NSE is playing a key role to help develop this enormous opportunity for Nigeria and fulfil one of our key objectives as a member of the UN Sustainable Stock Exchange Initiative,”
For Chapel Hill Denham CEO and Advisory Group Member Bolaji Balogun, the planned debut green bond issuance “demonstrates Nigeria's seriousness about its climate change commitments and is evidence of its willingness to subject itself to the discipline and transparency that capital markets require."
There is also acknowledgement of the wider implications from Funmi Ogunlesi, Executive Director of Citibank Nigeria, "Citi recognizes the importance of this debut sovereign green bond to both Nigeria and Africa."
"The international banking and finance sector has an obligation to help develop climate finance solutions across emerging markets, and Citi’s role in supporting this initial Nigerian launch fits directly within that obligation.”
Throughout the project, in conjunction with the UNEP Inquiry, Climate Bonds Initiative has supplied technical support and specialist advice.
Nigeria’s climate challenge
Africa’s largest economy by GDP, Nigeria has a population approaching 180 million. The business capital, Lagos, is set to become one of the world’s 2030 megacities. Four of the world’s ten fastest growing cities are in Nigeria and the remaining six are also African.
The World Bank estimates that Nigeria will need USD 140bn to achieve its climate goals and meet its NDC targets. The low carbon-growth path encompasses clean energy, green infrastructure, improved transport, clean water, agriculture and large scale remediation and promise to enhance government efforts in creating green jobs for its young population.
Nigeria next in the 'Year of Sovereign Green Bonds'
Poland gained a place in green finance history in December with the first ever sovereign green bond, followed by France in early January. Nigeria looks set for third place on a global basis and the first from Africa.
Climate Bonds estimates that 9 or 10 nations will either issue or signal sovereign green issuance in 2017.
Leadership from Africa would draw significant attention from those countries mulling over both their options and timing.
“Nigeria is the next building block in this year of sovereign green bonds,” points out Justine Leigh Bell Climate Bonds’ global Director of Market Development.
“The work in Nigeria is about tangible, green finance outcomes that other developing nations can follow. Together with UNEP and local stakeholders, that's the goal we're working to achieve.”
The last word
‘As goes Nigeria, so goes Africa’ is a well-known proverb.
Morocco took early action at COP22 in Marrakesh with MASEN’s Climate Bond Certified solar issuance of 1.15 billion dirham (USD 272m) and the purchase of USD 100m of green bonds from the IBRD.
Africa’s biggest nation is now taking its turn. Success could mean international investors taking up subsequent issuances and give real impetus to other countries looking to finance their own climate actions.
Thursday’s Lagos Conference will draw several hundred national and international attendees focussed on Nigeria’s green bond program.
The implications for green finance should not be underestimated.
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Co-written by:
Andrew Whiley: Communications Manager for the Climate Bonds Initiative.
Ms. Esther Agbarakwe: Communications Adviser to the Hon. Minister of Environment Nigeria.
Disclaimer: The information contained in this media release does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.
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