The Lagos State government has signed a Memorandum of Understanding (MoU) with FMDQ Group and Financial Sector Deepening Africa (FSD Africa), as implementing partners on the proposed N25 billion (over $60 million) to N100 billion financing to raise funds for the Lagos Green Bond Market Development Programme.
According to the state Governor Babajide Sanwo-Olu, “Lagos State is particularly mindful of the effects of climate change and, as such, has shown and continues to show its commitment to achieving the Sustainable Development Goals (SDGs), a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030.
He explained that, “to achieve these lofty goals however, funding is required – far in excess of what the state can currently generate and very urgently. The financial sector will therefore need to play a vital role in accelerating the local market’s ability to provide the required support, by expanding to green lending as an alternative source of funding for financing eligible green projects and assets in Lagos State.
“That is what we see here today, and I heartily commend and thank our partners, the Financial Centre for Sustainability (FC4S), FMDQ and FSD Africa, funded by the UK Government, who are supporting this development programme.
Sanwo-Olu further stressed that, “this Green Bond Framework Development Program is a crucial first step towards creating a viable financing option for future green and sustainability projects. There is no doubt that Green Bonds can assist in unlocking sustainable investment opportunities in Lagos State, opening the door to advance adoption of innovative new technologies, financing of projects that provide green jobs, and promote economic and climate resiliency.
“With an expected population growth to 40 million inhabitants by 2050, the government is saddled with not only delivering on economic growth, but mitigating against adverse effects of climate change and waste generation. These are all opportunities that Green Bonds can be used to address.
“As a government, we are committed through our SDG-aligned development agenda (known as THEMES) to utilise our very limited resources more efficiently for which circular economy is a promising and viable alternative. Public spending and investments by itself may not be enough to deliver on circular societies, therefore the need to channel more private investments for the transition to a zero waste and circular economy, as well as achieving the SDGs.
“I strongly believe that the green bond programme will open the doors of deep sustainable funds for infrastructure and social development for Lagos, being the biggest player in the sub-national capital market, and therefore open new doors overall for lots of others.
“As a state, we embrace the transparency and commitment that comes with a Green Finance framework. We believe it sends an important signal to investors in the market about who we are – a state that is fiscally responsible, prudent and disciplined. This has indeed been re-affirmed by our ratings upgrade by Fitch Ratings, an Internationally renowned rating agency, from AA+ (nga) to AAA(nga) for ‘good standing in terms of its debt sustainability and resilience’, which happened just yesterday.
“It is our intention to continue to validate this reality – as well as our commitment to building a Greater, Circular, Climate-resilient and Prosperous Lagos State which is unwavering. This initiative will go a long way towards ensuring it is actualised, and we look forward to continuing to blaze the trail of leadership, financial accountability, innovation and sustainability.”
However, Commissioner for Finance Rabiu Olowo noted Lagos has over 20 years’ experience in raising bonds. The state raised N100 billion bond last year, being the highest then.
Special Adviser to the governor on Sustainable Development Goals (SDGs) Solape Hammond said the MoU signing was the start of the framework for managing the bond.
“We will identify the green projects the state should pursue and that would determine what amount we would be looking to do. It could be anything between N25 billion and N100 billion, but it really depends on the number of green projects we are able to find,’’ she added.
According to the Chief Executive, FMDQ Group Bola Onadele-Koko said the firm is proud to partner the state to address climate and environmental challenges through the bond.
He noted that the bond would stimulate economic growth, create jobs and align the Governor Babajide Sanwo-Olu’s THEMES agenda with achieving the Sustainable Development Goals (SDGs) as highlighted by the United Nations.
“This will stimulate economic growth, enhance job creation, and align the State’s THEMES agenda towards transitioning Lagos State to a greener and more sustainable economy in line with the United Nations Sustainable Development Goals.”