UK body, firms in deal to deepen Nigerian green bonds

London-based investor-focused not-for-profit organization that promotes large-scale investment in the low-carbon economy – Climate Bonds Initiative has reached agreement with FMDQ OTC Securities Exchange and Financial Sector Deepening Africa (FSD Africa) to develop a green bond programme in Nigeria. 

The cooperation agreement to deepen green finance in Nigerian debt capital markets was signed between the three organisations at the Climate Bonds Initiative annual conference in London.

Nigeria’s intention to issue sovereign green bonds was formally announced by President Muhammadu Buhari during Climate Week New York in September 23, 2016 where the federal government signed the Paris Climate Agreement. It is estimated that Nigeria will need up to $142billion translating to about $10billion per annum by 2030 to meet its climate commitments.

The Federal Government has included green bonds as an option to finance the programmes and projects identified in Nigeria’s Nationally Determined Contributions (NDCs) on climate change, with a focus on addressing key challenges such as poverty, unemployment, environmental degradation, climate change, the infrastructure gap and food security.

The expansion of the global market for green bonds presents an opportunity to join the momentum to provide resources for the NDCs.Green Bonds have the potential to deliver the low carbon, climate resilient infrastructure needed in Nigeria including renewable energy, low-carbon transport, water infrastructure and sustainable agriculture. Increasing access to both domestic and international bond markets and capital pools is an increasingly important strategy in supporting low carbon growth and national development goals.

Speaking at the occasion. Evans Osano, FSD Africa, Director – Capital Markets Development said: “This partnership provides a new opportunity for our three organisations to work closely together in developing Nigeria’s debt capital markets through the green bond programme. 

“This programme will improve access to a complementary source of longer-term capital alongside traditional, shorter term bank loans, while contributing to the financing of ‘green’ investments and improving the environment.”CEO FMDQ OTC Securities Exchange, Bola on Adele, is excited and optimistic that our pursuit to develop a Green Bond market will address infrastructure gaps and environmental challenges in a sustainable manner to deliver prosperity for Nigerians. 

According to Justine Leigh-Bell, Climate Bonds Initiative, Director, Market Development, “Nigeria has the opportunity to be a regional driver of green finance, demonstrating how Africa can leverage long-term capital to meet its vast infrastructure needs. In turn this will help establish a secure and sustainable future with new economic opportunities.

Meanwhile, the former UN Climate Chief and Convenor of Mission 2020, Christiana Figueres has called on cities, governments and corporations to commit to the use of green bonds for infrastructure investment programs.  

Speaking to participants from over 55 nations at the Climate Bonds Initiative annual conference in London, she unveiled a new campaign have public and corporate capital expenditure programs increasingly aligned with climate and emissions goals.

The Green Bond Pledge seeks to have cities, public authorities and world’s largest corporates commit to increased use of green bond finance to ensure new infrastructure meets the challenges of climate change and contributes to the accelerated transformation of the economy that is necessary and achievable by 2020. Developed by international climate finance and sustainability groups, the Green Bond Pledge is a declaration that reinforces the goals of the Paris Agreement. 

It is based on the premise that public and private sector bonds financing long-term infrastructure and capital projects need to address and incorporate climate risk and impacts.  Green bonds contribute to environmental and climate outcomes and their use signals that these factors have been deliberately incorporated into the financing planning and deployment of new projects and developments.