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Friday, September 29, 2023

Green bond: Ministers host advisory group parley

Minister of Environment, Amina Mohammed, in collaboration with the Minister of Finance, Kemi Adeosun, has initiated steps needed to issue Nigeria’s first Sovereign Green Bond. This, it was gathered, is part of a strategic process to add to the nation’s funding options in the financing of its development initiatives.

The Public-Private Advisory Group meeting on the Green Bonds

The process, the Environment Ministry disclosed in a statement issued on Thursday, 12 January 2017, will also enable the country tap into the growing global market for green bonds, which is estimated to have reached $100 billion by the end of 2016.

As part of the process to ensure that there is wide consultation on the process of periodic issuance of the Federal Government Green Bonds, Mohammed and Adeosun on Thursday hosted a Public-Private Advisory Group meeting on the Green Bonds.

According to Ms. Mohammed, the advisory group will provide advice and also identify likely impediments to the issuance process and provide guidance on how projects can be certified “Green”. The minister further stated that the group was set up to provide support to the Federal Ministry of Environment in its implementation of the Green Bond guidelines in order to maintain a process that is transparent and consistent.

Both ministers, in consultation with experts and key actors, have agreed on a number of key requirements in the issuance of the Green Bond.

These are:

  • the projects should be green in nature,
  • the project cost should form part of the Medium Term Sector Strategies (MTSS) of selected Ministries Departments and Agencies (MDAs),
  • the project should have a defined revenue model or economic impact that generates resources that will be used to service the green bond, and
  • the emissions contributions of the projects should be calculated and documented.

A sub-set of Inter-Ministerial Committee on Climate Change (ICCC) was tasked to identify the pipeline of projects with “Green Credentials” that will be funded by the Green Bond. The ministries, departments and agencies (MDAs) in this sub-set are Environment (FRIN, CCD, DDA, FOR, GGW), Federal Ministry of Agriculture and Rural Development (FMARD), Ministry of the Federal Capital Territory (FCT-Transport), Federal Ministry of Water Resources (FMWR) and Federal Ministry of Works, Power and Housing (FMWPH).

The Federal Ministry of Environment, it was gathered, has developed a set of guidelines, drawing from the template model provided by the International Capital Market Association (ICMA) with technical inputs from Debt Management Office (DMO), Climate Bonds Initiative, United Nations Environment Programme (UNEP) and the World Bank.

In September of 2016 the Federal Ministry of Environment held a stakeholders meeting with key players in the capital markets on the plans for issuance of a Green Bond. To continue the consultations, the ministry in collaboration with Ministry of Finance set up a Green Bond Private Public Advisory Group (GB-PPSAG) to continue consultations which will support the Federal Government in the process of development of a Green Bond programme.

A high-impact stakeholders meeting with Capital Market operators and investors will hold in Lagos at the end of February, 2017.

Participants on the Advisory Group are drawn from investments banks, developments banks, issuance houses, MDAs and capital market regulators. Ministry sources say that the issuance of Nigeria’s Sovereign Green Bonds will probably be the first in an emerging market in the world and in Africa.

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