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

5

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

6 6

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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