Nigeria Green Bonds: Completing the Task of Issuance

 

green bonds

The Paris Agreement signed and ratified by President Muhammadu Buhari in March of 2017 has an often-overlooked yet critical provision. In article 2 it outlines the aims of the agreement, one of which is “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. The Federal Ministry of Environment (FMEnv) under the leadership of the Hon Minister of State for Environment, Ibrahim Usman Jibril has significantly progressed a process that started in September of 2016 with a stakeholders forum that attracted key development partners, capital market operators and public sector institutions. The initiative has resulted in a plan to issue a program of N150 billion in green bonds over the next few months with a pilot issue of N12.384 billion in the 3rd quarter of 2017 and the balance over the course of the budget year. Collaboration between Ministry of Environment and Finance continues to pull together the institutional partners necessary to achieve what would be Nigeria and Africa’s first sovereign green bond and the worlds 3rd.

Growth of the Global Green Bond Market

The global market for green bonds took off in 2005 with an issuance by the European Investment Bank (EIB), since then the market has grown significantly to an annual issuance market last year of USD80 billion. Green bonds are like regular bonds, with a slight difference – they can only be used to fund projects that have been identified to have environmental benefits and their contribution to emissions reduction clearly articulated. The global market for green bonds is expected to exceed last year’s amount and China remains a dominant participant in the market. Issuances to date have been largely by corporates and parastatals with the first sovereign issuance in November of last year for Eur750m by Poland and a follow on by France in January of 2017 for Eur7 billion. Commitments by signatory nations in the Paris agreement are expected to boost this market as resources are redirected toward development objectives that are sustainable from a climate perspective and contribute to global reduction in emissions.

Chart of Green Bond Market growth
greenbonds chart

Federal Ministry of Environment Preparation

The Ministry of Environment as custodian of the nations commitments under the United Nations Framework Convention on Climate Change (UNFCCC) has provided considerable direction to the process of issuance to ensure that the key elements needed for identification of projects that will meet the green credentials are in place. In November of 2016 the Ministry issued its Green Bond Guidelines drawing from the International Capital Market Association (ICMA) Green Bond Principles (GBP). Working through the Inter-Ministerial Committee on Climate Change (ICCC), it engaged various Federal Government Ministries Departments and Agencies (MDAs) to identify projects with green credentials that will provide the foundation for issuance of the green bond. In agreement with the Minister of Finance (MOF), the projects are required to be included in the budget approved by the National Assembly and assented to by the President.

Inter Agency Participation

The Debt Management Office (DMO) as key issuer of FG debt is the key liaison with the Ministry of Environment. A Green Bond Account to hold the resources was recently created by the Central Bank of Nigeria (CBN) after approval from the Office of the Accountant General of the Federation (OAGF). Frequent engagement between FMEnv and the Budget Office of the Federation (BOF) within the Ministry of Budget and National Planning (MOBNP), with the June 13th signing of the 2017 budget by the Acting President, Professor Yemi Osibanjo has affirmed the allocations to the identified projects. The projects are Energizing Education Program (EEP) for N9.5 billion, the Renewable Energy Micro Utility (REMU) for N475m and the FMEnv’s Afforestation Program for N2.3 billion for a total of N12.38 billion.

Green bonds process

greenbond process

The Green Bond Advisory Group

To enable the Federal government draw on a wide arrange of expertise in progressing and developing the issuance of the green bond, the Ministry of Environment and Finance established the Green Bond Advisory Group (GBAG). The GBAG is made up of development partners (World Bank, DfID, AfDB, & IFC), Capital Market Operators (Nigeria Stock Exchange, Capital Assets, Chapel Hill Denham & Stanbic IBTC) and Climate Bonds Initiative, London. The GBAG meets frequently with its first meeting in January of 2017 leading to a conference on green bonds in Lagos in February of 2017 at which the Acting President was a key note speaker. The GBAG remains the interface between the development partners and the capital market in ensuring the pilot issuance of the green bond happens in the 3rd quarter of 2017

Benefits to DMO Debt Strategy

The DMO has disclosed its strategy to be the restructuring of the Federal Government’s debt portfolio to replace short tenured bonds with long tenor and high rates with lower rates. This strategy includes the tapping of the international capital markets and a green bond issuance with the right framework will provide a credible platform to tap into the global market for green bonds. The London Stock Exchange (LSE) has indicated a willingness to participate in the green bond advisory group to provide necessary guidance to the FG to achieve this objective.

Benefits to the Economic Recovery & Growth Plan

The recent launch of the government’s Economic Recovery & Growth Plan (ERGP) has key objectives that are a catalyst for the issuance of the green. In addition to having as its objective the meeting of some of the goals in the United Nations Sustainable Development Goals (SDGs), it also has as an objective the issuance of a green bond to fund projects that have environmental benefits. Some of the objectives in the ERGP include; identification of revenue flows to government, job growth and creation. Population impact and improvement in livelihoods are articulated in the targets of the individual projects to be funded by the green bond.

Summary

To deliver on the Nigeria’s Nationally Determined Contribution (NDC) will require a fundamental re-orientation of financial flows within the economy. Capital will need to flow toward low-carbon, climate resilient opportunities and away from carbon intensive, polluting activities or those that exacerbate climate vulnerability leading to poverty, insecurity and reduced health quality. The issuance of the green bond will begin the process of green the federal budget and the capital market. It will also demonstrate to the global community Nigeria’s commitment to achieving its targets in the NDCs.

For the FGs debt portfolio it adds to the cocktail of capital products that are being explored in ensuring resources are available to fund the FG annual budget. On a strategy level it provides a platform for DMO to achieve the objective of extending tenor of the FG debt portfolio and also reduce interest cost. It would also establish a framework by which sub nationals and corporate can tap into the green bond market.

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The President is attending the One Planet Summit which aims to mobilize the financing needed for developing countries to attain the goals and targets of the Paris Climate Agreement. The theme of the Summit is ‘Climate Change Financing’.

In Paris he will reiterate Nigeria’s commitment to realising the objectives of the Paris Agreement, as well as strengthen Nigeria’s partnerships with fellow governments, and other regional and global Climate Action partners and stakeholders. At the Summit the President will deliver a speech on behalf of Nigeria. He will also attend a lunch hosted by President Emmanuel Macron of France for visiting Heads of State and Government.

Nigeria joined several other countries around the world to sign the Paris Agreement in December 2015. President Buhari signed the Agreement on the sidelines of the United Nations General Assembly (UNGA) in New York on September 22, 2016, and followed this up with the signing of the Instrument of Ratification at the State House, Abuja, on March 28, 2017. This ratification made Nigeria the 146th party to the Paris Agreement. The Agreement became binding on Nigeria with effect from June 15, 2017, one month after the submission of the Ratification Instrument to the United Nations on May 16, 2017.

Under the Agreement Nigeria has committed (the so-called ‘Intended Nationally Determined Contributions – INDCs) to reducing carbon emissions 20% unconditionally and 45% with international support, by 2030. To achieve this Nigeria requires billions of dollars in funding and investment for energy, transport and agriculture projects that would reduce carbon emissions and mitigate the effects of climate change (manifesting as desertification, flooding, erosion, erratic rainfall, etc).

Nigeria has prioritized five sectors for the implementation of its INDCs, as follows:

  1. Oil and Gas (a new National Gas Policy that will reduce flaring, and also promote the use of gas instead of wood products)
  2. Agriculture and Land Use (Climate-smart agriculture)
  3. Transport (Shift from road transport to rail; also shift from transport powered by fossil fuels to renewable energy).
  4. Industrial Energy Efficiency
  5. Power (A new energy mix that increases the contribution of renewable energy sources; investment in solar and wind energy)

Financing is required not only for investment in the needed infrastructure but also for research and development aimed at advancing climate-friendly technologies.

Climate change is deeply connected to the Sustainable Goals Agenda of the United Nations. Goal 13 of the SDGs prescribes “urgent action to combat climate change and its impacts.”

Government cannot singlehandedly fund the implementation of the INDC targets. An estimated 80% of the funding for climate action will need to come from the private sector. This is why the Government of Nigeria is launching, this month, a Green Bond, to raise domestic financing for low-carbon infrastructure projects across the country.

Partnerships are key to the success of the Paris Agreement. The Government of Nigeria is collaborating with subnational governments, regional and continental organisations, development finance institutions, the private sector and civil society groups, to ensure the success of its climate action efforts.

The One Planet Summit is being hosted by the President of France, Emmanuel Macron, and organised by the United Nations, the World Bank Group, the French Government and a coalition of NGOs/CSOs.

Follow updates using the hashtags: #PMBinParis, #ClimateActionNG and #CFD2017

The Nigeria Nationally Determined Contributions, NDC, ambition under Climate Change Accord will cost estimated $142 billion, to meet the 2030 target.The Minister of State for Environment, Ibrahim Jibril, disclosed this at the UN while presenting Nigeria’s progress report on climate change goal under the Sustainable Development Goals.

The NDC is a binding agreement, which spelt out the actions a country intends to take to address climate change – both in terms of adaptation and mitigation – when it ratifies the Paris Agreement.

The minister said: “The delivery of our NDC will require a fundamental re-orientation of financial flows within the economy.

“It is estimated that Nigeria will require around $142 billion, translating to about $10 billion per annum to meet her NDC target by 2030,” he said.

He said Nigeria had recognised that climate change presented one of the greatest challenges of the world today.

“In the midst of this vulnerability, an opportunity resides for Nigerian economy to grow in a manner that is climate resilient and empowers people whilst meeting its energy deficiency.

“One of the innovative means of exploring this opportunity is through the issuance of green bonds, which has gained recognition as means of raising finance for climate friendly purposes.

 
“Accordingly, the Federal Government has advance plans to issue a program of N150 billion in green bonds over the next few months.

“This is with a pilot issue of N12.384 billion in the third quarter of 2017 and the balance over the course of the budget year.

“Collaboration between Ministry of Environment and Finance continues to pull together the institutional partners necessary to achieve what would be Nigeria and Africa’s first sovereign green bond and the world’s third.”

Mr. Jibril said Nigeria was partnering with the Lake Chad basin countries to address the challenges of drying up of the lake which will have adverse consequences on the people and the ecosystem.

“Equally, actions to fast track the environmental clean-up of the Niger Delta beginning with Ogoniland are undoubtedly one of the most significant decisions taken by the President Muhammadu Buhari’s Administration.

“The President’s action has now breathed new life into a four-year report by the UN Environment Programme (UNEP), which hitherto had experienced a series of false starts since it was published on Aug. 4, 2011.”

The Minister of State for Budget and National Planning, Zainab Ahmed, said Nigeria’s progress towards localising the SDGs was with an emphasis on ensuring implementation across all levels of government.

“Specifically, the Ministry incorporated and ensured policy linkages between the SDGs and the Economic Recovery and Growth Plan, a four-year medium term development plan launched on April 5, 2017.

“The plan is aimed at ensuring sustained and inclusive growth; building a globally competitive and diversified Nigerian economy, investing in our people and building strong governance institutions to drive change.”

Additionally, specific programmes and projects aimed at achieving the SDGS have been integrated into the 2017 National Budget, and will be included in future budgeting frameworks, she said.

 

 

 

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Introduction
The 11th National Council on Environment (NCE) was held at the June 12 Cultural Centre, Kuto, Abeokuta Ogun State from 16th to 18th October 2017. It was chaired by the Honourable Minister of State for
Environment, Ibrahim Usman Jibril with the theme “Unlocking the Investment Opportunities in the Environment Sector Towards Nigeria’s Economic Recovery, Diversification, Growth and Sustainable Development”.

2. The opening ceremony featured presentation of welcome address by the Permanent Secretary Federal Ministry of Environment, Dr. Shehu M. U. Ahmed, goodwill messages by the wife of the Governor of Ogun State, Dr. (Mrs.) Olufunso Amosu, the Representative of the Chairman, Senate Committee on Environment, Sen. Magnus Ngei Abe
and the Chairman House Committee on Climate Change, Hon. Samuel Onuigbo, as well as from the Honourable Speaker, Ogun State House of Assembly, Rt. Hon. Suraj Adekunbi. The session also featured remarks by the Honorable Minister of State for Environment Ibrahim Usman Jibril.

3. The Council meeting was declared open by the Executive Governor of Ogun State, His Excellency, Senator Ibikunle Amosu, CON, FCA., who delivered the Keynote address.

4. A total of 712 participants from 23 States, including State
Commissioners for Environment; Forestry; Permanent Secretaries; Director General/CEOs of Agencies; Directors of MDAs; Officials of Federal and State Ministries of Environment; Non-Governmental Organizations (NGOs); Civil Society Organizations (CSOs) and Development Partners attended the 3 day meeting.

5. The Council considered 83 memoranda, stepped down 16, and recommended 67 consisting of 38 action and 29 information memoranda.

6. Council Resolutions:
Council deliberated extensively on all the memoranda and noted the emerging environmental issues, climate smart actions and the need to update all relevant environmental regulations as well as immediate
commencement of the implementation of the Strategic Environmental Assessment (SEA) for all policies, plans and programmes in Nigeria. Accordingly, the Council resolved as follows:
i. The current Forest Cover of Nigeria is less than 4% as against the expected 25%. Therefore, exportation of charcoal in Nigeria should be banned and alternative clean source of energy should be developed and promoted.
ii. That Federal Ministry of Environment should step up actions toward synergy with relevant MDAs through Memoranda of Understanding (MoUs) in order to resolve serious challenges of overlap, conflict and duplication of regulatory roles.

iii. That the Federal Government should put in place policies and other measures to promote provision and utilisation of Solar Energy and energy efficient cook stove.
iv. That there should be synergy between the Federal and State Governments in the implementation of climate change
programmes especially on capacity building and access to
global climate finance.

v. That State should be encouraged to put in place Waste-to Wealth programmes/initiatives that can attract private sector
participations and foreign direct investment in order to unlock
investment opportunities in the waste management sub- sector.
vi. That State Governments should provide security for Federal Ministry of Environment projects under implementation in their States to prevent vandalisation and also fullfill their obligations as agreed.

vii.That the Federal Ministry of Environment should domesticate Minamata Convention on Mercury and other Multilateral Environmental Agreements (MEAs) ratified by Nigeria.

viii. That the Federal Ministry of Environment and States should establish reliable electronic based data bank on Pollution Control and Waste Management issues in the country.

ix. That Flood Early Warning Systems (FEWS) in flood prone areas should be installed by Federal, States and Local Governments to save lives and property during flooding.

x. That States that have indicated interest to key into the NEWMAP Programme should put aside minimum counterpart fund of N500 million, provide 12.90% of total cost of the project as well as provide base line data of erosion sites in their States.

xi. That more awareness and sensitisation should be carried out to achieve better adoption of Tree planting and reforestation of degraded forest estates.

7. Appreciation
Council appreciates and commends the Government and good people of Ogun State for the warm hospitality extended to the delegates and excellent arrangements put in place for the successful hosting of the 11th NCE.

DONE THIS DAY, WEDNESDAY 18TH OCTOBER, 2017 AT ABEOKUTA, OGUN STATE

Download copies of the 11th NCE report and the Communique:

11th National Council on Environment Report
11th NCE Communique

NIGER 1

Appoints Coordinator For Ogoni Clean-Up

Vice President Yemi Osinbajo has declared that notwithstanding the past leadership and governance failures, which resulted in the worrying conditions of Nigerians in the oil-producing communities of the Niger Delta, the people of the area still deserve a fair deal.

Osinbajo said it is the reason the current administration is now advocating a new vision for the people of the Niger Delta. A statement by his Senior Special Assistant on Media and Publicity, Laolu Akande, last night said Osinbajo spoke yesterday at the Presidential Villa while chairing an inter-ministerial follow-up meeting with relevant government ministries, departments and agencies involved in the Niger Delta,

“The President believes the people of the Niger Delta deserve justice, and for me also, it is a very important point,” the Vice President stated, adding that the state of the region and the suffering of the people does not reflect the fact that “it is the resource base of the country.”


Continuing, he said: “In spite of the past leadership failure, the Niger Delta people deserved a fair deal.” Osinbajo told the inter-ministerial team that includes ministers and others MDA heads that the meeting was to ensure “we are faithful to the promises and spirit of the presidential engagements with the people of the Niger Delta.”

In attendance at the meeting were the Minister of the Niger Delta, Pastor Usani Uguru Usani, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and Minister of State for Environment, Alhaji Ibrahim Jubril.

Others include the Presidential Adviser on Amnesty Programme, Maj-Gen. Paul Boroh, and the Managing Director of the Niger Delta Development Commission (NDDC), Mr. Nsima U. Ekere.

All the ministers and officials made presentations about the next steps in the process, especially on how to effectively meet the commitments and deliver the promises made by the Federal Government during the interactive engagement tours led by the Vice President.

In his presentation, Jubril disclosed that the ministry has now fully engaged the Ogoni Clean-Up Project Coordinator, Dr. Marvin Dekil, an indigene of Ogoni. Besides, he also revealed that potential contractors have been visiting the site to demonstrate available and suitable technology to be used for the exercise.

Later, Osinbajo also received a delegation of western diplomats from countries involved in the oil industry in Nigeria. The delegation was led by the Dutch Envoy in Nigeria, Ambassador John C.M. Groffen, and included Ambassadors, High Commissioners or their deputies from the United Kingdom (UK), France, Germany, Italy, United States (US) and the European Union.

The Vice President told the diplomats that the idea of the interactive engagements with the oil-producing communities originated from President Muhammadu Buhari after he met with leaders from the region last November.

He added that the Buhari administration is working on how to make a positive and long-lasting impact in the region in a way that transforms the lives of the people from the “treasure trove of Nigeria.”

He added that the Federal Government welcomes partnership and support of the western countries in that effort.

Speaking on behalf of the delegation, Groffen said the countries represented at the meeting would like to stay involved in the dialogue and commended the administration’s approach of the matter.

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