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NGX, IFC to facilitate issuance of green, social, sustainability bonds

Nigerian Exchange Limited (NGX) and International Finance Corporation (IFC) have announced a partnership to facilitate the issuance of green, social and sustainability bonds in Nigeria to increase financing for projects that address climate and social issues.

The announcement was made during a Green and Sustainability Bond workshop co-hosted by both institutions in Lagos, and supported by HSBC Regio Fund and The Kingdom of Netherlands.

Through the partnership, NGX and IFC will facilitate knowledge sharing with market stakeholders and other exchanges in Africa experienced in issuing green and sustainability bonds, support the training and development of local verifiers for green bonds, and support the launch of a Sustainability Board.

To further advance Nigeria’s green and sustainability bond development, the workshop brought together domestic and foreign stakeholders including, regulators, policy makers, institutional investors, pension fund managers, and trading license holders, focusing on key topic areas including the World Bank Group’s experience in the field of green bonds; the role of NGX as infrastructure for issuance and subscription to green, social and sustainability bonds in Nigeria; general trends in green and social bonds and IFC’s experience in structuring and achieving these objectives.

Delivering his opening remarks, Temi Popoola, Chief Executive Officer, NGX noted that the African continent, according to the African Development Bank (AfDB), faced major risks and exponential collateral damage from global warming despite contributing the least to emissions. He underpinned AfDB’s estimates that the continent required over $3 trillion of investments by 2030 to mitigate these risks and implement its Nationally Determined Contributions.

“In 2016, NGX conceptualised and developed the Green Bond Product Paper which was embraced and championed by the Debt Management Office (DMO) and the Federal Ministry of Environment. This resulted in the issuance of the first N10.69billion (about $25.8million) 5-year green bond in 2017, and subsequently, a second tranche of N15billion (about $36million) 7-year green bond in 2019 which was oversubscribed.”

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According to Popoola, the green bond market had experienced substantial progress over the years with several sovereign and corporate green bonds listed on the Exchange.

“These follow-on issuances have further increased investible instruments and deepened the Nigerian Green Bond market. It is noteworthy that the size of the Green Bond market is currently N55.52 billion (about $133.8 million).”

He mentioned NGX’s Memorandum of Understanding with the Luxembourg Stock Exchange to promote cross-listing and trading of green bonds in Nigeria and Luxembourg, of which Access Bank’s N15billion green bond was part. Popoola also stated that NGX is a member of the United Nations Sustainable Stock Exchange initiative and supports capacity development and investor awareness through its X-Academy.

“NGX will continue to work with internationally recognised organisations such as IFC to share valuable green finance experiences and best practices, as well as to promote the development of sustainable finance market segments for supporting government, policymakers, regulators, financial market participants, domestic and international thought leaders, investors, and other market stakeholders,” Popoola added.

IFC’s Senior Country Manager for Nigeria, Sierra Leone and Liberia, Kalim M. Shah said, “Nigeria will require billions of dollars to meet its climate goals, reduce carbon emissions and reach net-zero targets. IFC continues to play a significant role in mobilising private sector capital to support climate-smart investments, working with stakeholders to increase credible green, social, and sustainability bond issuances in Nigeria.

“We will bring IFC’s and the broader World Bank Group’s experience to the Nigerian capital market by supporting regulators, issuers, and exchanges on developing the framework, and socialization of green, social and sustainable bonds. Our partnership with NGX highlights the potential to increase climate financing, and we look forward to working together to support green bond issuances on NGX.”

Speakers at the event included Riccardo AMBROSINI, Regional Climate Finance Lead, IFC, Yasser MOUNSIF, Head of Corporate Finance, AMMC – Moroccan Capital Market Authority, Adriana CRUZ FELIZ, Vice President and Manager SPO team in EMEA Moody’s, James SEWARD, Capital Markets and Investment, World Bank Treasury, among others. Representatives from the Federal Ministry of Environment, Securities and Exchange Commission and the Debt Management Office also attended the event.