Green Bonds enable capital-raising and investment for new and existing projects with environmental benefits. The nationally determined contributions (NDC) reflect Nigeria's commitment to the COPs of the UNFCCC in reducing the impact of climate change. It has significant overlaps with the nations development objectives and provides a platform to redirect resources in an effective manner that can have a dual impact, key development targets such as power and agriculture and emissions targets in both renewable and energy efficiency.
The resources needed to achieve the targets in the NDCs by 2030 are put at some USD142billion, translating to about USD10billion per annum. Nigeria's confirmed recession and reduction in its main source of income requires creative and directed means to mobilize resources that will fill its funding gap while also ensuring that project implementation achieves the expected outcomes.
The expansion of the global market for Green bonds presents an opportunity to join the momentum to provide resources for the NDCs. Nigeria's relatively developed fixed income market provides a platform for a pilot green bond. However, the fixed income market is dominated by FG debt with a limited slice attributed to the private sector.
A green bond issuance is expected to have multiple objectives:
The issuance of a Green bond will enable the country achieve the following:
These Green Bond Guidelines (GBG) are issued by the Federal Ministry of Environment (FMEnv) to guide the process for issuance of green bonds targeted at the Nigeria market. The GBG are intended for broad use by the market: they provide the FMEnv a means to ensure resources raised are channeled towards activities that compliment the NDCs; they provide issuers with guidance on the key components involved in launching a credible Green Bond; they aid investors by promoting availability of information necessary to evaluate the environmental impact of their Green Bond investments; and they assist underwriters by moving the market towards expected disclosures which will facilitate transactions. The GBG recommend a clear process and disclosure for issuers, which investors, banks, investment banks, underwriters, placement agents and others may use to understand the characteristics of any given Green Bond. The GBG emphasize the required transparency, accuracy and integrity of information that will be disclosed and reported by issuers to stakeholders. The GBG has four components: