EED FOR SUSTAINABLE FINANCE IN THE NIGERIAN EBT APITAL … · BRICS and other EM Countries (as % of...
Transcript of EED FOR SUSTAINABLE FINANCE IN THE NIGERIAN EBT APITAL … · BRICS and other EM Countries (as % of...
NEED FOR SUSTAINABLE FINANCE IN THE NIGERIAN DEBT CAPITAL
MARKETS
SEPTEMBER 2017
PRIVATE & CONFIDENTIAL
BOLAJI BALOGUN
CHIEF EXECUTIVE OFFICER
CHAPEL HILL DENHAM
SUSTAINABLE FINANCE
• Sustainable Finance ensures and improves economic efficiency,
prosperity, economic competitiveness today and in the long-term,
while contributing to protecting and restoring ecological systems
and enhancing cultural diversity and social well-being.
• Sustainable Finance activities include:
❖ Sustainable Funds
❖ Green Bonds
❖ Impact Investing
❖ Microfinance
❖ Active Ownership
❖ Credits for Sustainable Projects
❖ Development of the capital markets in a more sustainable way
Population forecast to reach 400
Million
3rd most populous Country
This requires Nigeria to address its:
• Infrastructure Deficit
• Housing Deficit
• Education and Literacy &
• Employment and Job Creation
All these areas have Capital Market and
Sustainable Finance solutions
Our Capital Markets strategy, which
includes Sustainable Finance must
translate to Economic Development for
Nigeria
Potential To Be a Top 7 Global Economy By
GDP
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NIGERIA IS PROJECTED TO BE THE 3RD MOST POPULOUS COUNTRY ON EARTH …
2050
OPPORTUNITIES FOR SUSTAINABLE FINANCE IN NIGERIA
▪ Sustainable Finance provides a medium to
finance the global shift to low-carbon and
climate resilient development and growth,
attracting investors who are ESG inclined
▪ Nigeria’s infrastructure deficit is a major
impediment to diversifying the economy and
industrialization
▪ The power sector in Nigeria currently suffers a
US$40 billion deficit and could tap into this
opportunity
▪ This deficit, coupled with the increasing energy
demand encourage the potential for renewable
energy projects
INFRASTRUCTURE … AN ENABLER OF ECONOMIC GROWTH
Over the next decade, Nigeria needs NGN 86
trillion to meet its infrastructure
investment needs
1% increase in infrastructure stock
results in 1% increase in GDP
Given the fiscal constraints of the FGN, private investment will play a growing role in
delivering infrastructure
Traditional sources of infrastructure financing
(Banks) are being squeezed, due to
global macro conditions and tighter financial regulations
The markets – via Bonds, Infrastructure
Funds, and Guarantees – represents a
sustainable funding source for
infrastructure
35.0
47.0
58.0
76.0
87.0
70.0
80.0
Nigeria Brazil India China S. Africa Indonesia Poland
Benchmarking Nigeria’s Infrastructure Stock to BRICS and other EM Countries (as % of GDP)
Source: National Integrated Infrastructure Master Plan
+NGN 4.4Trillion for railways
+ NGN 7.3Trillion for power
+ NGN 3Trillion for airport/aerodromes
+NGN 5.1Trillion forroads (new, maintenance, & rehab)
+ NGN 9.1Trillion for water ways, ports
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6.6 12.0
20.1
33.2
54.0
86.5
2014-18 2019-23 2024-28 2029-33 2034-38 2039-43
Annual Infrastructure Average Spending Requirement (NGN Trillion)
SOCIAL INFRASTRUCTURE … CREATES JOBS AND ALLEVIATES POVERTY
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SUSTAINABLE FINANCE IS AVAILABLE FOR LOW CARBON INFRASTRUCTURE
Sustainable Finance is accretive to all 17 SDGs
• Sustainable Funds
• Green Bonds
• Impact Investing
• Microfinance
• Active Ownership
• Credits for Sustainable Projects
• Development of the capital markets in a more sustainable way
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FINANCING LOW CARBON RESILIENT INFRASTRUCTURE
THE NATIONAL INTEGRATED INFRASTRUCTURE MASTER PLAN
NIIMP SECTOR GREEN BOND POTENTIAL
ENERGY
Gas
Hydropower
Solar PV and wind
Energy Efficiency
T & D
TRANSPORT
Highways
Railway
Urban mass transit
ICT
Water
Agriculture
Mining
Housing
Vital Registration and Security
NIGERIA’S DEBUT GREEN BOND
The Ministry of Environment in collaboration with the
Ministry of Finance have initiated action towards the
issuance of Nigeria’s 1st Sovereign Green Bond
Subsequently, a plan is in place to launch a N150 billion
Green Bond Issuance Programme, with a debut issue in the
4th quarter of 2017
The Federal Government of Nigeria Green Bond
Programme will fund projects such as :
❖ The Energizing Education Programme;
❖ The Solar Unit Distribution programme;
❖ Bus Rapid transport in Abuja &
❖ Afforestation scheme
STAKEHOLDERS IN DEVELOPING GREEN BONDS IN NIGERIA
STAKEHOLDERS
DMO
CBN
SEC
PenCom
FMDQ, NSE
Ministry of Finance
UNEP, CBIWorld Bank,
IFC, AfDB
Asset Managers
Banks and Insurance
Companies
PFAs
Corporate Issuers
State Governments
Investors
Partners
Regulators & Gov’t Institutions
Other Issuers
BUILDING A GREEN BOND ECOSYSTEM
Engagement With Key Regulators
Investor Buy Side Education
Engagement with potential sub-national and corporate Issuers
1. Engagement with SEC, Pencom, CBN and other regulators to ensure they develop comprehensive guidelines that will ease and encourage green bond issuances
2. Educate the investor buy side, and particularly the PFAs, to build knowledge and comfort that will encourage investment in green bonds
3. Encourage large subnational and corporate debt market issuers to develop a pipeline of green projects to ensure sustainability of green bond issuances to follow the sovereign issuance
Debut Subnational& Corporate
Issuance
Debut Sovereign
Green BondIssuance
Repeat Issuances
THANK YOU
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