Nigeria is preparing to introduce the first Sovereign Green Bond in Africa, disclosed the country’s Acting President Prof. Yemi Osinbajo last week.
Speaking at the Green Bonds Capital Market and Investors Conference, Prof. Osinbajo said that the bonds would help finance sustainable environmental projects that address climate change. The conference was organized by the Federal Ministry of Environment in association with the Debt Management Office at the Nigerian Stock Exchange (NSE).
Around US$64 million (N20 billion) of bonds would be available as a first tranche of the Sovereign Green Bonds, which are essentially debt instruments issued by the government and tied to environmental projects. The bonds are expected to be offered in the first quarter of this year and will be sold through the nation’s bourse in Lagos
Prof. Osinbajo said that proceeds from the initiative would be used to tackle climate change that is linked to natural disasters and which negatively impact food, water and energy supplies. He added that the bonds would also bring a new addition to the market funding portfolio at NSE and deepen the capital.
According to the Acting President, who is in charge of the country as President Muhammadu Buhari is abroad, convalescing following medical treatment, noted that the bond issuance would support the Federal Government's shift to non-oil base assets for project financing for economic growth and development.
He said that about half of the proceeds from the bonds, around $32 million, would be used to support environmental projects in three communities. These projects included renewable energy micro-utilities, including the production of an average of 33KW of power through solar technology.
He also noted that the Energizing Education Program (EEP), which is estimated to cost $213 million, would provide 120MW of power from off-grid solar technology to 37 federal universities and seven teaching hospitals that faced with major power challenges.
Nigeria is working toward achieving 30 percent in renewable energy by 2030. If properly harnessed and invested in critical socio-economic and environmental sectors, the bonds could help create new jobs, open up investment avenues that would impact the lives of common Nigerians.
For her part, the Minister of Environment Amina Mohammad said that an advisory group had been formed to provide advice on how projects can be certified ‘Green’ and that the government’s Green Bonds would help Nigeria tap into the growing global market for green bonds which is estimated to have reached $100 billion by the end of 2016.