With the global momentum towards building sustainable financial systems, the increasing significance of environmental, social and governance (ESG) factors on financial sector development and the growth in green and sustainable finance initiatives world over, the City of Lagos recently joined 23 other international financial centres, including London, New York, Paris, Geneva, Hong Kong, Shanghai, Seoul, among others, as a member of the International Network of Financial Centres for Sustainability (“FC4S Network”), a United Nations (UN) Environment Programme-convened international network that seeks to shift private capital to climate-friendly and green investments.
The objective of the FC4S Network is to create a platform for financial centres to exchange experiences and take common action on shared priorities to accelerate the expansion of green and sustainable finance and the long-term vision of the Network is rapid global growth of green and sustainable finance across the world’s financial centres, supported by strengthened international connectivity, and a framework for common approaches, a vision that closely aligns with FMDQ’s Debt Capital Markets Development’s economic development agenda to reposition and organise the Nigerian Debt Capital Market (DCM) to access a global pool of long-term sustainable capital.
This landmark achievement for Lagos, a megacity whose securities exchanges have over 860 listed securities, which now extends the membership of the FC4S Network to three African countries – Morocco, Kenya and Nigeria – was facilitated by FMDQ Securities Exchange plc (“FMDQ or the Exchange”) through the activation of the Lagos Financial Centre for Sustainability (“LFC4S”) in April 2019, following a challenge posed to FMDQ by the UN Environment Programme (UNEP) Inquiry, to provide an advocacy platform that will support policy makers in the pursuit to mobilise impact investments and drive standards needed to tackle the state’s socio-economic challenges.
With 43 senior representatives from 26 organisations in attendance at the inaugural LFC4S meeting convened by FMDQ, participants approved the constitution of a Governance Board, and unanimously elected Bola Onadele. Koko, MD/CEO, FMDQ, as chairman, and Doyin Salami, CEO, Kainos Edge Consulting Limited, as vice chairman. Furthermore, FMDQ was selected as the LFC4S Secretariat and four Thematic Leads – Farouk Aminu (head, investment supervision, National Pension Commission), Kemi Awodein (managing director, investment banking, Chapel Hill Denham Advisory Limited), Andrew Nevin (partner & chief economist, PricewaterhouseCoopers) and Chidi Mike-Eneh (head of credit, Infrastructure Credit Guarantee Company Limited) – were appointed to lead the following Thematic Areas – Policy & Regulation; Issuances & Investments; Research, Education & Engagements and Legal & Risk Management, respectively.
Recognising the potential of the LFC4S, Satya S. Tripathi, UN Assistant Secretary-General and Secretary of the UN Environment Management Group in the UN Environmental Programme, in his press release announcing the admission of Lagos into the Network, said, “Lagos joining the FC4S opens up new possibilities for Nigeria and countries in West Africa to leverage sustainable finance for social and climate impact. We welcome Lagos into the fold and look forward to doing great things together.”
Commenting on the initiative, Babajide Sanwo-Olu,governor of Lagos State, said, “I am confident that the establishment of the Lagos Financial Centre for Sustainability will contribute significantly to Lagos State’s push to attract sustainable private capital that will complement public resources to address infrastructure and social challenges and enhance climate change mitigation.
“We support this initiative and congratulate FMDQ Securities Exchange and the UN Environment Programme for championing this innovative private sector-led solution.”
Recognising the need for a dramatic acceleration in green and climate financing, FMDQ, as an agent of change and champion of innovative game-changing financial markets initiatives, has been pioneering the establishment and development of sustainable financing in Nigeria.
In demonstrating its commitment to promote investment in green initiatives and create a framework for climate change mitigation measures, FMDQ, in June 2018, partnered with Climate Bonds Initiative (“CBI”) and Financial Sector Deepening Africa (“FSD Africa”), to establish the Nigerian Green Bond Market Development Programme to create awareness and drive education required to integrate the principles of sustainable financing into the Nigerian DCM, thereby accelerating the development of the green bond market in Nigeria.
In December 2018, at the request of UNEP, FMDQ and its Sustainable Finance Sub-Committee of the Debt Capital Markets Development (“DCMD”) Project 2025 supported the development and launch of the 2018 Nigerian Sustainable Finance Roadmap Report.
According to the 2018 Nigerian Sustainable Finance Roadmap Report, annual sustainable finance flow into Nigeria is estimated at just over $8 billion mainly from public sources.
The Report maintains that to achieve the Nationally Defined Contributions (NDCs) of the Paris Agreement and meet the Sustainable Development Goals (SDGs) by 2030, the opportunity for sustainable finance-related private capital in Nigeria could be roughly twenty (20) times the current flows (i.e. $160 billion), which will go a long way to support investments in high impact areas such as clean energy, sustainable cities, agriculture, housing, healthcare, education, transport and digital infrastructure, which Lagos will benefit from as the commercial hub of the nation.
Bola Onadele. Koko, MD/CEO, FMDQ, also the convener of the inaugural LFC4S meeting and pioneer Chairman of the LFC4S Governance Board, opined, “as the economic and financial centre of Nigeria, Lagos has the advantage of financial resources and strong human capital to support the development of green and sustainable financial markets, and FMDQ, in collaboration with key market stakeholders, will continue to devote resources to drive initiatives that will entrench sustainability in the Nigerian economy.”
He further stated that the LFC4S will work actively with other financial centres to ensure global growth in green and sustainable finance, thereby delivering long-term prosperity to Nigeria. He concluded that “FMDQ recognises the imperative role it plays in the Nigerian financial market and the opportunities its business presents in its ability to promote sustainable economic growth and development in the wider economy.”
There is no gainsaying that opportunities abound for Lagos as a member of the FC4S, including but not limited to, showcasing the commercial city as a key financial centre working towards the implementation of the SDGs, positioning Lagos as a leading financial centre in sub-Saharan Africa through effective and coordinated policy dialogue on sustainability efforts, affording Lagos an opportunity to draw lessons and insights from more developed financial centres that will aid its contribution to climate action and sustainable development and positioning LFC4S to lead the establishment of a regional platform for African financial centres which will be used to harness efforts towards expanding green and sustainable finance in the continent.
IHEANYI NWACHUKWU
