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How Nigeria will gain from the proposed $64 Million ‘Green’ Bond

Thursday last week can best be described an epoch making day in a renewed drive to exit recession relying on the imports of the $500 million Eurobond which had already instilled confidence in financial policy makers and industry players.

Unveiling the $64 million ‘green’ bond slated for April at the floor of the Nigerian Stock Exchange (NSE), Acting President, Yemi Osinbajo said the new deal will change the face of the Nigerian economy for good and assist in Nigeria’s early exit from recession.

He told market makers and attendees that at the Green Bonds Capital Market & Investors Conference organized by the Federal Ministry of the Environment and the Debt Management Office (DMO) at the Nigerian Stock Exchange (NSE) in Lagos that all Nigeria need is to sustain the tempo of confidence and drive towards bettering our ease of doing business.

A green bond is just like any other bond Nigeria has issued but with a specific target- the money obtained from the bond is channeled into funding projects that are environmentally friendly or ‘green’, hence the name given to the bond. These ‘green’ projects include renewable energy, clean transportation and sustainable water management.

Osinbajo made it clearer that the deal will boost Federal Government’s diversification strategy to non-oil sectors would receive from the bond as well as the added benefits of eradicating poverty caused by natural disasters from climate change and deepening the nation’s capital market.

Explaining more on the targets of the Green Bond issue, the out-gone Minister of Environment, Amina Mohammed said the deal will drive further investment in agriculture, oil and gas and infrastructure development which will in turn grow Small and Medium Enterprises (SMEs), manufacturing and stability of new and old businesses in the areas of job creation and revenue generation for the economy.

Business Hilights also learnt that the emerging Green bond is part of the federal government’s Economic Recovery and Growth Plan (ERGP).

The ERGP has a target of creating 15 million jobs by 2020. Projects funded by the bond are expected to create 10% of that target.

Nigeria will be the first emerging market in sub Saharan Africa to have a green bond.

Projects to be funded by the green bond will be taken from the 2017 budget.

The intended amount to be raised from the green bond is 20 billion naira.

The first panel discussion comprised the Ministers for Environment Power Works and Housing, as well as Federal Capital Territory (FCT). They highlighted the various projects that could be funded using green bonds. Namely: mass transit scheme, solar street lights, and a railway system that has the option of running with electricity.

Mrs. Mohammed also gave a firm assurance that the green bond programme would continue after her exit to the United Nations, this was also echoed by the Minister of State for Environment.

Already, fresh reports from Moodys said over $200 billion worth of green bonds have been issued in the past ten years. China has been a key player in the green bond market, with over $36 billion dollars green bond issuances so far. Estimates of potential green bond projects are currently over $700 billion dollars.

Again, statistics show that the benefits of a green bond to the issuer, in addition to accessing more funds, include an enhanced global reputation and commitment to sustainable development. In addition, for mono-economies like Nigeria, green bonds offer a means of channeling funds into other sectors that can drive the nation’s economy.

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