Nigeria's Vice President, Prof. Yemi Osinbajo, has announced that the federal government is currently making arrangements to inaugurate the first African sovereign green bonds.
Osinbajo, who is acting on behalf of President Buhari whilst he is out of the country, said this at the Green Bonds Capital Market and Investors Conference held last week in Lagos, the Guardian reported.
Green bonds are standard bonds with a green element as a bonus feature, which have been created to fund projects that have positive environmental and/or climate benefits.
The acting President explained to the media that the federal government under the green bonds initiative would give N20 billion ($63 million) under the first tranche before the end of Q1 of 2017 through the nation's bourse.
Osinbajo, who described the initiative as a new addition to the market funding portfolio, maintained that the proceeds would be used to fight climate change.
He said that the proceeds of the bonds would be used for environmental projects such as renewable energy micro-utilities in three communities, without specifying which communities, estimated at a cost of N10 billion ($31 million).
He also underlined the impact that climate change has had leading to more natural disasters, which has therefore affected food, water and energy supply.
The acting President said that the initiative would also provide an opportunity to deepen the capital market as well as tackle poverty, media reported.
Shift to non-oil based assets
It is reported that Osinbajo said the bond issuance will support government's shift to non-oil base assets for project financing for economic growth and development.
He further noted that power has posed a major challenge in the nation's universities, adding that 37 federal universities and seven teaching hospitals would benefit from the Energising Education Programme (EEP).
He stated that the EEP project estimated to cost $213 million would provide 119MW of power in 37 universities using off-grid solar technology.
Green bonds market growth
It is reported that the green bond market, which took off in recent years with $42 billion issued in 2015, has continued to grow with issuance in 2016 hitting over $50 billion by September.
Previously, the president of the Sustainable Energy Practitioners Association of Nigeria, Dr Chidi Onuoha, said: “We have been able to set up the West African Emission Trading Association. With this, we want to be ready to tap into the business opportunities that the carbon we save can give us.”
“We want to be able to trade the carbon for money because emission trading is key in this business,” Onuoha added.