The Federal Ministry of Environment at the weekend held a stakeholder consultation on the pilot issuance of green bonds in Nigeria as part of moves to explore innovative sources of funding for its climate action plan towards sustainable development estimated at $142 billion.
The stakeholder consultation, which took place in Abuja, had participants drawn from the federal ministries of finance, budget and national planning, trade and investment, the Nigerian Stock Exchange (NSE), the Debt Management Office (DMO) and the Central Bank of Nigeria (CBN).
Other institutions in attendance were the Securities and Exchange Commission (SEC), the National Assembly, the Africa Finance Corporation, the World Bank, UNEP, UNDP, McKingsey & Company, Chapel Hill Denham, Stanbic IBTC, DFID/NIAF and other private sector representatives.
Nigeria’s Intended Nationally Determined Contribution’s (INDC) document puts forth the stated targets for Nigeria’s contribution towards climate improvement and following a low carbon path to progress.
The country, like most nations around the world, faces vast investment needs for the transition to a sustainable, low carbon and climate resilient economy.
The government has made it clear that private sources of finance are needed, and “tapping into the international capital market, as well as domestic capital, is crucial,” said Amina Mohammed, the minister of environment.
“The resources needed to finance the INDCs is put at $142 billion between now and 2030, and the issuance of green bonds, which have grown from $3 billion per annum since 2012 to an estimated $100 billion for 2016 present a viable option,” according to a statement signed by Esthere Agbarakwe, who is the special assistant to the minister on communications.
Green bonds have been the subject of increasing government, investor and media interest and expectations, driven by the prospect of matching large low‑carbon investment requirements with the trillions of dollars in global bond markets held by institutional investors.
Speaking at the event, Oscar Onyema, CEO of the Nigerian Stock Exchange, said that there is significant market potential for green bonds in Nigeria as a developing market with a population in excess of 180 million people.
He further stated that green bonds could mobilise funds from investors who have strong environmental focus, require transparency and have lower risk appetite.
According to the United Nations Environment Programme (UNEP), green bonds have the potential to deliver the low carbon, climate resilient infrastructure needed in Nigeria, such as renewable energy, low-carbon transport, water infrastructure, sustainable agriculture, among others.
UNEP says this could be made possible with access to private capital at scale through the international and domestic bond markets.
Experts say that access to private capital is essential to substantially lower the cost of capital for green projects, and enable Nigeria to move to a less emissions intensive growth path.
YANGE IKYAA
