FMDQ, CBI, FSD AFRICA, Launch Nigerian Green Bond Market Development Programme

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As the prime mover and champion of innovative and game-changing financial markets initiatives, FMDQ OTC Securities Exchange (“FMDQ” or the “OTC Exchange”), in partnership with Climate Bonds Initiative (“CBI”), Financial Sector Deepening Africa (“FSD Africa”) (all three (3) institutions referred to as the “Parties”), is making, what can be seen as one of its most significant contributions yet, to the development of the Nigerian non-sovereign debt capital markets (DCM), specifically the green bond market. The Parties are spearheading a 3-year Nigerian Green Bond Market Development Programme (the “Programme”) to, among others, create awareness and drive education required to integrate the principles of green financing into the Nigerian DCM, thereby facilitating the establishment and development of the green bond market in Nigeria. The Programme, more specifically, will support the development of guidelines and listing requirements for green bonds in Nigeria, develop a pool of Nigeria-based licensed verifiers to support issuers, facilitate engagement with extant and potential issuers and investors, and support broader DCM reforms that have/will have an impact on the non-government bond market in Nigeria.

In March 2018, the Parties formalised a partnership, which stemmed from the growing global recognition of the role sustainability plays in strengthening financial stability and supporting overall economic growth in a nation, through the signing of a Cooperation Agreement, to support the development of the Nigerian green bond market for a period of three (3) years. The partnership is aimed at, among other things, enabling the OTC Exchange garner the necessary support required to promote impact investing as entrenched under the sustainable finance pillar in the FMDQ Debt Capital Markets Development (DCMD) Project, and at providing the necessary tools to allow the OTC Exchange continually pursue an economic development agenda to reposition and organise the Nigeria DCM to access a global pool of long-term climate-related capital.

Subsequently, in June 2018, the Parties, supported by the Securities and Exchange Commission (“SEC”) and Access Bank PLC (“Access Bank”), launched the Programme in a 4-day series of events, commencing with a Green Bond Bootcamp for key regulators and other major capital market participants focusing on the basics of green bonds, its pricing, and project identification methodologies required to foster green issues, then followed by a series of targeted roundtable sessions for investors, issuers and intermediaries respectively, to demystify the concept of green bonds as an alternative financing instrument for market stakeholders, and culminating in the official Launch Ceremony of the Programme on Thursday, June 7, 2018. The Ceremony brought together all the key financial market stakeholders (regulators, issuers, investors, intermediaries, inter alia) to discuss the concept of green bonds and the opportunity for Nigeria. Among those present at the Launch Ceremony were His Excellency, Mr. Akinwunmi Ambode, Governor, Lagos State, ably represented by the Deputy Governor, Lagos State, Dr. Idiat Oluranti Adebule, Honourable Minister of State for Environment, Mallam Ibrahim Usman Jibril, Chairman, House Committee of Capital Markets, Honourable Tajudeen Yusuf, Vice Chairman, Senate Committee on Capital Market, Senator Foster Ogola, Ag. Director-General, SEC, Ms. Mary Uduk, Deputy British High Commissioner to Nigeria, Ms. Laure Beaufils, Commissioner for Finance, Lagos State, Mr. Akinyemi Ashade, Director-General, Debt Management office (DMO), Ms. Patience Oniha, represented by Mr. Oladele Afolabi, Director, Portfolio Management Department, DMO, and Group Deputy Managing Director, Access Bank, Mr. Roosevelt Ogbonna, amongst other capital market operators.

Welcoming the guests to the Launch, Honorable Tajudeen Yusuf, expressed the House’s avowed commitment to innovations aimed at making the Nigerian DCM deeper, more liquid, vibrant, and capable of financing the development of infrastructural projects that will support the preservation of the economic environment. Whilst His Excellency, Mr. Akinwunmi Ambode, represented by Dr. Idiat Oluranti Adebule, during his keynote speech stated “the State Government will continue to be at the forefront of the campaign that will make our environment healthy and sustainable”. He further stated that Lagos State had set out policies and programmes on tree planting, conservation, transportation systems, waste and water management that would focus on providing profitable investment opportunities and climate-friendly projects.

Mallam Ibrahim Usman Jibril, during his speech commented, “the ministry having paved the way for the first sovereign issuance will continue to engage the network of private and public players that will help the Federal Government meet its Nationally Determined Contributions (NDCs) as enshrined in the Paris Agreements”.

Commenting for one of the partners, Ms. Justine Leigh-Bell, Director, Market Development, Climate Bonds Initiative, stated, “we are very excited about this significant milestone. Working with FMDQ and FSD Africa will provide a platform to open up the Nigerian economy to a wider investor universe as we commence our journey to deepen the local capital markets by entrenching financing instruments such as green bonds”. She further stated that development of green bonds will help address environmental challenges as well as plugging the infrastructure gap. Whilst Dr. Evans Osano, Director, FSD Africa, also commented, “this partnership will provide the opportunity to work closely together in developing Nigeria’s debt capital markets through the Nigerian Green Bond Market Development Programme as it is expected that this Programme will improve access to a complementary source of longer-term capital, alongside traditional, shorter-term bank loans, while also contributing to the financing of ‘green’ investments and improving the environment”.

Mr. Bola Onadele. Koko, Managing Director/CEO of FMDQ, in his closing remarks, reiterated the advantages of issuing green instruments to help tackle some of the infrastructural challenges in Nigeria and stated that FMDQ, as an OTC Exchange with a passion for developing the Nigerian DCM, was excited and optimistic that its pursuit to develop a Nigerian green bond market, in partnership with reputable institutions such as FSD Africa and CBI, would help address infrastructure gaps and environmental challenges in a sustainable manner to deliver prosperity for Nigerians.

The Parties are expected to deliver a series of targeted educational and awareness campaigns in the coming months in support of their Nigerian green bond market development agenda.

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