Economy
Moody’s Assigns GB1 to Nigeria’s Green Bonds
By Modupe Gbadeyanka
Nigeria’s senior unsecured green notes have been assigned a Green Bond Assessment of GB1 (Excellent) by Moody’s Investors Service.
A statement issued by the rating agency disclosed that the GB1 grade is supported by a full allocation of proceeds to renewable energy and afforestation projects that qualify under Nigeria’s domestic green bond guidelines and international green bond taxonomies, including the Green Bond Principles and Climate Bond Initiative’s (CBI) Climate Bond Standard.
On December 18, 2017, Nigeria will launch the Series 1 green bond of 10.69 billion, with precise coupons and maturities to be determined at the time of closing.
The green notes will represent the Nigerian government’s debut offering under its N150 billion green bond program and is expected to be listed on the Nigerian Stock Exchange (NSE). It will also mark the first sovereign green bond issuance in Africa, and the fourth on record globally.
Nigeria is the largest economy is Africa, generating a gross domestic product of $405.9 billion, in nominal terms, last year.
The country is also the continent’s most populous, with an estimated population of over 180 million and has been actively engaged in international climate policy negotiations since it became a Party to the United Nations Convention on Climate Change in 1994, and is a signatory to the Paris Agreement on Climate Change.
“In preparation for Africa’s maiden sovereign green bond, the Government of Nigeria has put in place a comprehensive governance structure and framework that is aligned with the country’s domestic green bond guidelines and international best practices,” says Rahul Ghosh, a Moody’s Senior Vice President.
“Robust disclosure practices, including expectations of ongoing and granular reporting over the life of the bond, will facilitate the implementation of Nigeria’s Paris Agreement commitments,” adds Charles Berckmann, Assistant Vice President and lead analyst in Moody’s Green Bond Assessment team.
Moody’s said further bolstering the GB1 grade is the government’s comprehensive organization and governance structure, which includes a formal green bond framework and explicit guidelines on eligible categories, project evaluation and selection criteria, and oversight from internal bodies and external organizations.
To support the green bond initiative, the government has set up a Green Bond Private Public Sector Advisory that is comprised of external development partners, independent regulators, capital market operators and relevant ministries.
The development partners include the World Bank, International Finance Corporation, African Development Bank, the United Nations Environment Program (UNEP) and the CBI.
The disclosure on use of proceeds practices are robust overall, providing a strong level of detail on project descriptions, applied methodologies, and intended benefits. The government has provided portfolio-level technical reports for each of the three programs that will be financed with the green bond proceeds.
Each report contains comprehensive program descriptions, assessments of the environmental, financial and economic impacts and an evaluation of safeguards and social implications. The funding in place to complete the projects appears adequate, despite the government’s weak fiscal position and recent track record of enacting significant capital expenditure cuts.
The Nigerian authorities have adopted a clear internal process and formal set of administrative policies designed to manage the segregation and tracking of green bond proceeds. This includes the creation of a centralized Green Bonds Proceeds Account held at the Central Bank of Nigeria, and individual sub-accounts for specific environmental projects. Any unallocated proceeds will be held in accordance with the government’s normal liquidity management policy, which comprises of investments in cash, short-term deposits and other short-term liquidity instruments. One area of slight weakness is the lack of an unequivocally independent internal audit of the centralized and sub-accounts.
The government has committed to bi-annual reporting, initially within one year of the issuance and subsequently until full allocation of the proceeds.
Furthermore, it has signalled its intention to provide ongoing disclosure over the life of the bond, and potentially afterwards given that green project metrics will be used to track the annual performance of Nigeria’s nationally determined contribution (NDC) under the Paris Agreement, which runs until 2030.
While the NDC targets will be reported on an aggregated basis, the authorities have indicated that reporting on the green bonds will be provided at a project level. The government has also indicated that the annual reports will be segregated by the relevant green bond and, as such, subsequent issuances would be covered in separate annual reporting.
Economy
Customs Street Opens Week Bullish With 0.02% Growth
By Dipo Olowookere
The first trading session of the new week on the floor of the Nigerian Exchange (NGX) Limited ended on a bullish note on Monday after a marginal 0.02 per cent growth.
This was influenced by bargain-hunting activities in the financial and industrial goods ecosystems.
According to data obtained from Customs Street, the insurance space grew by 2.12 per cent, the industrial goods sector appreciated by 0.17 per cent and the banking space expanded by 0.12 per cent.
However, due to profit-taking, the consumer goods index went down yesterday by 0.46 per cent and the energy counter decreased by 0.11 per cent.
When the bourse ended for the session, the bulls were in charge after dealing with the bears, leaving the All-Share Index (ASI) higher by 16.68 points to 102,370.36 points from 102,353.68 points and the market capitalisation increased by N10 billion to N62.861 trillion from N62.851 trillion.
Investor sentiment was strong during the session after the stock exchange finished with 32 price gainers and 26 price losers, indicating a positive market breadth index.
Caverton gained 10.00 per cent to close at N2.42, Coronation Insurance improved by 9.91 per cent to N2.44, SCOA Nigeria expanded by 9.68 per cent to N2.72, UPDC jumped by 9.52 per cent to N1.84, and Universal Insurance also rose by 9.52 per cent to 69 Kobo.
On the flip side, Eunisell declined by 9.99 per cent to N14.06, John Holt lost 9.63 per cent to trade at N9.20, Secure Electronic Technology shed 8.99 per cent to quote at 81 Kobo, Honeywell Flour dropped 7.58 per cent to settle at N9.15, and PZ Cussons weakened by 6.00 per cent to N23.50.
Yesterday, a total of 1.3 billion shares worth N17.7 billion exchanged hands in 13,891 deals compared with the 327.8 million shares valued at N11.8 billion traded in 11,905 deals last Friday, implying an increase in the trading volume, value, and number of deals by 304.48 per cent, 50.00 per cent, and 16.68 per cent, respectively.
The busiest stock was Wema Bank with a turnover of 980.0 million units worth N9.8 billion, Universal Insurance sold 31.3 million units for N21.2 million, AIICO Insurance traded 22.2 million units valued at N36.9 million, Oando transacted 19.8 million units for N1.5 billion, and Zenith Bank exchanged 19.7 million units worth N926.0 million.
Economy
Nigeria Makes Maiden AfCFTA Shipment to Kenya
By Adedapo Adesanya
Nigeria’s maiden shipment under the African Continental Free Trade Area (AfCFTA) has successfully arrived at the Mombasa Port in Kenya.
According to the Nigeria AfCFTA Coordination Office in a statement, the development marks a historic moment for Africa’s trade landscape.
The Senior Trade Expert at the Nigeria AfCFTA Coordination Office, Mr Olusegun Olutayo, said in line with its mandate under the leadership of the National Coordinator, Mr Olusegun Awolowo, the office had coordinated the landmark event.
He said the achievement marked a significant milestone for Nigeria in realising the vision of increased intra-African trade and economic integration championed by the agreement in line with the decision of the AU Assembly at the 31st Ordinary Session of the Assembly.
“In times of escalating geopolitical tension and looming geo-economic fragmentation, AfCFTA presents a perfect opportunity for Africa to leverage trade as a strategic instrument for enhanced market access among state parties.
“This is a historic moment, a realisation of the vision of our continent’s founding fathers and mothers.”
He also said the first consignment which was a synthetic filaments product of Nigeria’s Lucky Fibres Limited (Lush), a subsidiary of the Tolaram Group, was exported under AfCFTA preferential terms.
Mr Olutayo lauded the bold economic reforms of President Bola Tinubu, emphasising their catalytic role in enabling the country’s active participation in AfCFTA, fostering continental economic integration and industrialisation goals.
He also commended the seamless cooperation and commitment from Kenyan authorities, which exemplifies the true spirit of AfCFTA.
He acknowledged the pivotal leadership role of the AfCFTA Secretariat in fostering the success and emphasised the collaborative efforts of the Kenya AfCFTA Implementation Committee and the Kenya Revenue Authority (Customs).
According to him, the shipment, exported under AfCFTA preferential trade terms, underscores partnership, shared vision, the agreement’s potential to transform Africa’s economic landscape and pave the way for a new era of trade-driven prosperity.
The AfCFTA seeks to create a single market across Africa by reducing barriers to trade, investment, and labour.
The agreement’s goal is to increase socioeconomic development, reduce poverty, and make Africa more competitive globally.
On March 21, 2018, the AfCFTA agreement was adopted and opened for signature in Kigali, Rwanda. The agreement entered into force on May 30, 2019 and officially commenced on January 2021
Former President Muhammadu Buhari established the National Action Committee on AfCFTA (NAC) in December 2019.
Economy
Capital Market Operators Get January 31 Deadline for Licence Renewal
By Adedapo Adesanya
The Nigerian Securities and Exchange Commission (SEC) has fixed January 31 as deadline for all Capital Market Operators (CMOs) to renew their operating licence.
In a circular to the operators on Sunday, the apex regulatory agency in the country’s capital market said the annual registration renewal would last between January 1 and 31, 2025.
SEC said the annual registration renewal enforcement for CMOs was aimed at ensuring that only “fit and proper” persons operate in the capital market, warning that CMOs without valid registration will be penalised and may be excluded from capital market activities.
”This is to inform all CMOs and the general public that the annual renewal of registration of CMOs for the year 2025 will commence from January 01.
“All CMOs applying for renewal are required to include their 2025 annual subscription receipt from their respective trade groups as part of their application.
“In line with the commission’s Rules & Regulations, all CMOs are to complete the process of renewal of registration for 2025 on or before January 31 via registration renewal portal at www.eportal.sec.gov.ng,” it said.
The commission added that CMOs desiring to make enquiries or get support to complete the process should contact [email protected].
The regulator said it had in 2021 re-introduced periodic registration renewal by CMOs to create a reliable active operators’ data bank in the country’s capital market.
It said the renewal arrangement aimed at updating operators information on capital market for official use by local and foreign investors, other regulatory agencies and the public.
The agency added that the renewals would drastically reduce incidences of unethical practices by CMOs which may affect investors’ confidence and impact the capital market negatively, noting that the exercise will strengthen supervision and monitoring of CMOs by the commission.
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