Nigeria to become leading investment destination in Africa with N10.69bn green bond listing

The N10.69 billion worth of federal government of Nigeria (FGN) green bond scheduled to be listed on the Nigerian Stock Exchange on Friday, July 20 has been described by market operators as an opportunity to launch Nigeria as the leading investment destination in Africa.

Operators who spoke to news reporters in Lagos while reacting to the listing expressed hope of it yielding much-needed diversification opportunities and sustainable financing.

Garba Kurfi, managing director APT Securities and Funds Ltd said the listing of the bond listing would enrich the nation’s bourse in terms of product diversity and market capitalization.

According to Kurfi, green bonds present countries with an opportunity to demonstrate national leadership in the green financing agenda.

He added that it would open new investors’ base and strengthen the country’s commitment to complying with the Paris climate change agreement.

The listing of the N10.69 billion, 13.48 percent five year bond is coming on the heels of the country’s sovereign bond listing in 2017 which was largely oversubscribed.

With these listings, Nigeria becomes the first nation to issue a sovereign green bond, the first African nation to issue a sovereign green bond and the fourth nation in the world to issue after Poland, France and Fiji.

Kurfi, who commended NSE for the initiative said that it would help in moderating climate change by investing in solar plants, hydropower and agriculture against the backdrop that 90 percent of Nigeria’s export income comes from crude oil.

Commenting on a draw-back of the initiative, Ambrose Omordion, the chief operating officer, InvestData Ltd said there is lack of international standardization of what constitutes a green bond.

Omordion said that there was the need for strong monitoring mechanism worldwide to ensure compliance with the bond’s framework.

“There is no worldwide monitoring mechanism to ensure compliance with the parameters set by frameworks such as the green bonds principles or climate bonds standards.

“There is therefore need to develop a community of local verifiers that will assess whether issuers’ green bond meets the requirement of the climate bonds standard,” he said.
Omordion however said that the implementation of tax incentives by the Federal Government would encourage new issuers to float green bonds.

“To further develop the market and enhance the growth of green finance, market operators have called on the government to implement tax incentives to issuers.

“Grant schemes should also be instituted to address some of the costs of issuing bonds for corporates, including independent reviews and project assessment and evaluation,” he said.

According to him, capital markets have a key role to play in mobilizing finance to support the Paris climate commitments and green bonds are among the financing options available to private firms and public entities keen on backing climate and environmental investments.

Green bonds are fixed income, liquid financial instruments used to raise funds dedicated to climate mitigation, adaption and other environment-friendly projects.

They provide investors with an attractive investment proposition and an opportunity to support environmentally and socially sound projects.