Federal Government through collaboration between the Federal Ministry of Environment and Finance has continued to pull together the institutional partners necessary to achieve what would be Nigeria and Africa’s first sovereign green bond.
Furthermore, upon the launch of the debt instrument, it will become the third Sovereign Green Bond issuance in the world. Globally, issuances to date have been largely driven by corporates and institutions. The first sovereign issuance occurred in November 2016 for €750 million by Poland followed by France in January of 2017 for €7 billion.
The global market for green bonds took off in 2005 with an issuance by the European Investment Bank (EIB), since then the market has grown significantly to an annual issuance market last year of $80 billion. By year-end 2017, the market is expected to exceed last year’s amount with China remaining the dominant participant.
Commitments by signatory nations in the Paris Agreement are expected to boost this market, as resources are redirected toward development objectives that are sustainable from a climate perspective and contribute to global reduction in emissions.
President Muhammadu Buhari signed and ratified the Paris Agreement in March of 2017. Article 2 of the agreement outlines one of its aims, which is “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
Subsequently, a plan is in place to issue a programme of N150 billion in green bonds over the next few months with a pilot issue of N12.384 billion in the third quarter of 2017, and the balance over the course of the budget year.
As custodian of the nation’s commitments under the United Nations Framework Convention on Climate Change (UNFCCC), the Federal Ministry of Environment issued its Green Bond Guidelines to ensure that the key elements needed for identification of projects that will meet the green credentials are in place.
With the June 13 signing of the 2017 budget by the acting President Yemi Osibanjo, affirmed the allocations to the first set of identified projects. The projects are Energising Education Programme (EEP) for N9.5 billion; the Renewable Energy Micro Utility (REMU) for N475 million and the FMEnv’s Afforestation Programme for N2.3 billion for a total of N12.38 billion.
OMOSOMI OMOMIA
