Nigeria raises landmark US$ 41m for Africa’s first corporate Green Bond
First corporate bond demonstrates the potential of Africa’s emerging Green Bond market
19 March, Lagos: Nigeria’s Access Bank Plc has issued the first certified corporate green bond in Africa, raising Nira 15 billion (US$ 41 million). Attracting a wide range of institutional investors, the issuance is a significant endorsement of Africa’s emerging green bond market.
The five-year, 15.50% fixed rate bond has been fully subscribed – demonstrating the high-demand and potential for green capital on the continent. Unlike previous bonds, this was the first African green bond certified as meeting international Climate Bond Standards. Proceeds from the issuance will finance green projects that will support the delivery of a low-carbon economy, in line with the objectives set by the Paris Agreement.
The popularity of the bond sets a strong precedent for Africa’s growing green bond market. The Nigerian Government issued the first fully-certified sovereign green bond in December 2018, which raised N10.69bn (US$29m). Momentum around climate finance is growing in Kenya too, analysts are forecasting an issuance later this year following the recent approval of local rules and guidelines.
The Access Bank issuance is the first corporate bond to benefit from an initiative led by the CBI, UK-Aid funded FSD Africa, and the FMDQ OTC Securities exchange, to develop the continent’s green bond market. The ‘Green Bonds Market Development Programme’, which has a sister programme in Kenya, provides training and support for regulators, investors and intermediaries on green bonds across the country.
Mark Napier, Director of FSD Africa commented:“Access Bank are trailblazers in the Green Bond market in Africa. We commend Access Bank for leading the way in Nigeria, and setting an example to corporates across the African continent. With the technical assistance of the Green Bonds Nigeria Programme, this CBI-certified Green Bond will fund climate-smart green projects in manufacturing, transport and agriculture sectors, thus helping to pave the way for Nigeria to develop into a low-carbon economy.”
Justine Leigh-Bel, Director Market Development, CBI commented: “This first Climate Bond certified corporate green bond out of Africa represents a major milestone in the development of the local green finance market. In addition to being an inspiration to other private companies, this leadership from Access Bank is critical for the long term development of the green finance market in Nigeria and a great example for other African nations to follow.”
Mr. Bola Onadele. Koko, Managing Director/CEO, FMDQ OTC Securities Exchange commented: “we congratulate Access Bank for pioneering the issuance of the first CBI-certified corporate green bond in Africa. This is in line with the objectives of the Programme executed under the collaboration and partnership of FMDQ, CBI and FSD Africa to entrench green bonds as investable capital markets instruments, in alignment with FMDQ’s mandate to deepen the DCM.”
Green bond issuance has gained traction globally as a means of enhancing issuer reputation and broadening the investor base, as investors recognise the impact of climate change and other sustainability factors on financial returns. In 2018, the global green bond marketsaw issuances of US$250 billion, a rise of 60% on the previous year, used to fund projects in sectors such as transport, energy and water.
The emergence of the green bond market in Africa will play an important role for governments to meet their commitments under the 2015 Paris climate accord, providing vital investment for the rapid and far-reaching transitions required to prevent global temperature rise, across energy, land-use, transport, infrastructure and industrial systems.
It is estimated that investment needs in energy alone amounts to US$2.4 trillion between 2016 and 2035. The Green bond market plays an essential role in attracting both public and private capital for climate finance.