Financial experts have highlighted the need to increase the products in the capital market, saying the market lacks sufficient asset classes for people to invest in.
The experts, who comprised policy makers, project developers and bank executives, spoke at the maiden Climate Finance Accelerator Workshop in Lagos on the need to collaborate on the financing of individual projects that would help deliver the Nigerian Nationally Determined Contributions.
According to the Nigerian Stock Exchange, the workshop is aimed at accelerating the transformation of the NDCs into climate investment plans supported by pipelines of bankable projects needed to attract investment at scale from the private sector.
A consultant at the Ministry of Environment and Sustainable Development, Columbia, Lina Peñuela, said, “Gathering the private sector, the financiers and the policy makers around common goals and climate change projects is a huge challenge.
“This is why initiatives such as the CFA are so relevant as our countries face ambitious climate change targets.” The Africa Programme Manager, Climate Bonds Initiative, Olumide Lala, stated that there was a need to focus on investments in green bonds. He said investor demand was driving the growth of green bonds in the country.
According to him, green bonds can be used as a tool to shift debt capital markets to climate solutions. Lala said, “When you think about the pension fund and the rate at which it is growing, soon we are going to run out of assets to invest in if we do not create more sustainable assets.
“We cannot just keep going to Treasury bills; otherwise, sooner or later we will run into a problem.” Lala noted that climate change had been an issue that required urgent attention. He said if climate change continued the way it was going in Nigeria and with the population, there might be a problem soon.
He stated that the difference between green bonds and other asset classes was the projects the proceeds were invested in, adding that green bonds were geared towards environmental cause. “We have moved from government bonds to sovereign bonds, and now, we are moving into corporate bonds. Government alone cannot solve this problem; it is important for the private sector to get involved,” Lala added.
He said, “The corporate bond market is not thriving as much as others because there is a lot of confidence lacking in that space. However, the structure is there to give the right confidence to the financiers, both local and foreign.”
The Divisional Head, Shared Services, NSE, Mr Bola Adeeko, said the workshop was coming at a time when the global economy was increasingly becoming more climate-aware. He stated that more corporates within the domestic economy were seeking sustainable financing, adding that one of the benefits of the CFA initiative was that it would attract large-scale investments to the market.
The Chairman of the Climate Finance Accelerator Workshop, Mr Kyari Bukar, who is also the former chairman of the Nigerian Economic Summit Group, said the NESG would continue to drive the advocacy for green finance as a catalyst to sustainable development in the country.
The workshop is scheduled to close today (January 26) with a special session at the Securities and Exchange Commission Zonal Office in Lagos, where the Minister of Finance, Mrs Zainab Ahmed, is billed to speak as the special guest of honour.