By Dipo Olowookere
In three years, the Nigerian green bond market grew by N49.19 billion from the scratch, giving local investors alternative investment opportunities and deepening the ecosystem, Business Post reports.
Before 2017, the space was untapped but the desire by the regulators, including the Securities and Exchange Commission (SEC), the Debt Management Office (DMO) and the Nigerian Exchange (NGX) Limited, spurred the creation of the market in Nigeria.
A total of four issuances have been recorded in the country from 2017 to 2019. Nigeria has not recorded any since the last two years and one of the major reasons could be the COVID-19 pandemic of last year.
In 2017, the Federal Government of Nigeria (FGN) issued the debut N10.69 billion, 13.48% 5-year sovereign green bond; followed by the N15 billion 15.5% 5-year fixed-rate senior unsecured green bond issued by Access Bank Plc; the N8.5 billion 15.6% 15-year guaranteed fixed-rate senior green infrastructure bond by North-South Power (NSP) Company; and the Series II N15 billion 14.5% FGN 7-year sovereign green bond in 2019, which recorded a 220 per cent subscription rate (oversubscribed by N17.93 billion).
In the view of the CEO of NGX Limited, Mr Temi Popoola, the local green bond market as well as the Sukuk market, have huge potentials to deepen the capital market.
“The potential for Sukuk and green bonds remains immense and is likely to expand over the years underpinned by new markets, products and issuers and healthy investor investors’ appetite,” he said at a webinar held on Tuesday on Green Bonds: More Than Just Investing.
Speaking further, Mr Popoola assured that, “The exchange will continue to provide an efficient and liquid market for investors and businesses in Africa, to save and access ethical and SDG compliant capital and investments.”
“We promise to continue our collaboration with all market stakeholders, to collectively contribute towards the enhancement of this exciting asset class, and ultimately towards the growth of green and Sukuk bonds in Nigeria and Africa at large,” he further assured.
The summit was held as part of efforts to drive the development and promotion of retail participation in the Nigerian capital market. It was put together in collaboration with APT Securities and Funds Limited, with different stakeholders in attendance.
In his presentation, the Director-General of SEC, Mr Lamido Yuguda, represented by Mr Abdulkabir Abass, lauded the organisers, saying “educational programmes such as this” were in line with his agency’s determination to build “capacity and growth the depth and breadth of the market.”
“This is particularly noteworthy in the emerging segments of non-interest and socially responsible investment.
“As the apex regulator, the SEC has the dual responsibility of regulation and market development. Forums like this, therefore, afford us the opportunity to educate retail investors on the gain of investing in the Nigerian capital market through green and Sukuk bonds.
“These segments of the market are quite unique and boast full potential that can facilitate the deepening of financial systems while spurring the growth of the economy, making this deliberation indeed timely,” he added.
The webinar featured a presentation on Harnessing Green Bond as a Tool for Personal Growth by the Assistant Director, Securities Issuance Unit, DMO, Mr Adamu Mohammed, who pointed out that investors were increasingly demanding socially responsible investment and have expressed a strong appetite for green bonds evidenced by subscription rates in Nigeria’s sovereign green bonds increasing to 220 per cent in 2019 over the 110 per cent at the debut issuance.
The Managing Director/CEO APT Securities, Mr Kasimu Garba Kurfi, used the occasion to provide insights on bridging the gap between ethical investing and socio-economic development, before going on to feature in a panel session alongside Ms Ummahani Ahmad Amin, Board Member, NGX; and Dr Afolabi Olowookere, Head, Economic Research and Policy Management Division, SEC.
Adedapo Adesanya