Appraisal of Green Bonds in Nigeria

Climate change is a global concern and just like every other global concern, countries in the world address this issue by advocating a global energy transition from reliance on fossil fuels to renewable energy. This is evident in the historical signing of the 2015 Paris Agreement by Nigeria in 2017. For the first time, countries all around the world came together and agreed on a single document that lays out a blueprint on how to tackle climate change through  sustainable investment mechanisms [1]. This unprecedented treaty charted a new course in the attempt to have a sustainable environment as it aims to reduce global greenhouse emissions. Domestic efforts towards sustainable financing entail utilising sustainable investment tools like green bonds, equities, or inclusion of green projects in the national budgets, while international support entails funding through international climate funds. Nigeria has attempted to fulfill its obligation under the Paris Agreement through the use of Green Bond. This article will discuss the issuance of Green Bonds in Nigeria and its effect on renewable energy funding.


Green Bonds in Nigeria

A green bond is a debt instrument, the proceeds of which are used to finance environmentally friendly projects. They are called green bonds because proceeds from these bonds are used solely for financing green projects, which are climate change mitigation and adaptation projects. A characteristic of a green bond is that the proceeds are used exclusively to finance or re-finance environment friendly projects, such as clean water and renewable energy [2].

Due to an increased local appetite for green bonds, the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) have respectively issued regulations on the issuance of green bonds. These regulations are modelled after the Green Bond Principles, an international set of guidelines that promote the integrity of the green bonds market [3].

To qualify as a green bond in Nigeria, the proceeds of these bonds must be invested in one or more of the following projects:

a. renewable and sustainable energy;

b. clean transportation;

c. sustainable water management;

d. climate change adaptation;

e. energy efficiency;

f. sustainable waste management;

g. sustainable land use;

h. biodiversity conservation;

i. green buildings (Commercial Real Estate Development);

and j.  any other categories as may be approved by the SEC [4]


Nigeria’s Government Issuance of Green Bonds

In December 2017, Nigeria joined the green bonds market, becoming the first African country to issue sovereign green bonds and the world’s fourth sovereign issuer of green bonds. The sovereign green bond provides a green financing agenda, encourages a new investor base, and enforces the country’s commitment to the Paris Climate  Change Agreement [5]. The debut issuance was to the tune of 10.69 Billion Naira with a commitment to use the proceeds to finance green projects in the 2017 Appropriation Act. These projects included powering the education sector, launching the Renewable Energy Micro Utility (REMU) project and National Afforestation Program.

The second issuance of green bonds in 2019 was worth 15 billion Naira (43.5 Million Dollars), and the focus was on 23 projects cut across five NDC sectors from the 2018 Federal Government of Nigeria (FGN)’s Appropriation Budget, selected and approved through the Inter-ministerial Committee on Climate Change (ICCC). At the time of issuance, there was no specific law for green bonds in the country, hence no endorsed domestic green bond standard. The Debt Management Office, which is the custodian of sovereign debts in Nigeria, adapted the International Capital Market Association (ICMA) Green Bond Principles as its guidelines for utilisation and management of the sovereign green bond proceeds. However, these guidelines applied only to the sovereign green bonds. The implication was that private sector issuances were to be left largely unregulated, giving chances for greenwash practices as experienced in the United States and a lack of transparency in the utilisation of green bond proceeds.

Aside from the Nigerian Federal Government, corporate entities in Nigeria also issue bonds. This reaffirms the collective mission to build a sustainably friendly environment. In April 2019, Access Bank Plc announced the issuance of the 1st certified corporate green bond in Africa, raising 15 Billion Naira (43.5 Million Dollars).


The economic and environmental significance of financing renewable energy through Green Bonds cannot be overemphasised. To fully maximise its potential, the Nigerian Government and corporate entities must not only issue bonds but ensure that these bonds serve their purpose through a robust regulatory framework that addresses the issues of corruption and mal-administration.



  1. Comparative Analysis of Green Bond Regimes in Nigeria And China Https://Www.Ajol.Info/Index.Php/Jsdlp/Article/Download/201510/190031 Accessed 10 April 2022
  2. Clean Financing- Green Bonds – TONBOFA Law Practice.
  3. Green Bonds and The Emergence Of Sustainable Finance in the Nigeria Capital Market – TNP. ng/insights/green-bonds-and-the-emergence-of-sustainable-finance-in-the-nigerian-capital-market
  4. Green Bonds and The Emergence Of Sustainable Finance in the Nigeria Capital Market – TNP. finance-in-the-nigerian-capital-market

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