Apart from its USD1 billion Eurobond, Nigeria will be floating a Green Bond in 2017. A Green bond is very much different from other bonds issued by governments as they are aimed at solving specific problems or challenges.
What Are Green Bonds?
According to Investopedia, a green bond is a tax-exempt bond issued by federally qualified organizations or by municipalities for the development of brownfield sites. Brownfield sites are areas of land that are underutilized, have abandoned buildings or are underdeveloped, often containing low levels of industrial pollution. Green bonds are short for qualified green building and sustainable design project bonds.
Green bonds are created to encourage sustainability and the development of brownfield sites. More specifically, green bonds finance projects aimed at energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, sustainable water management, and the cultivation of environmentally friendly technologies.
The tax-exempt status makes purchasing a green bond a more attractive investment compared to a comparable taxable bond, providing a monetary incentive to tackle prominent social issues such as climate change and a movement to renewable sources of energy. To qualify for green bond status, the development must take the form of any of the following:
In his speech to announcing the signing of the agreement and Nigeria’s intention to float the green bond, President Muhammadu Buhari said “We are set to launch our first ever Green Bonds in the first quarter of 2017 to fund a pipeline of projects all targeted at reducing emissions towards a greener economy Through an integrated approach, implementation of the NDCs, and our efforts to clean up Ogoniland, we will improve livelihoods, protect the environment and take climate
action, and ensure the implementation of the Sustainable Development Goals (SDGs).”
The decision of Nigeria to sign the Paris Agreement and float a green bond is not only commendable but expedient given the circumstances the country has found itself.
Apart from the morally binding decision to fight climate change, funds from the Green bond would go along in developing the North Eastern and the Niger Delta part of Nigeria which has been ravaged by oil pollution, terrorism and climate change.
The government is expected to state the value of the bond and its advisers in the deal.
GREEN ECONOMY is the way to go. We need to “strengthen the ecological foundations” of the Nigerian Economy.