The Securities and Exchange Commission (SEC) has stressed the need for harnessing the green bond growth potential to address the country’s infrastructure deficit.
The Director-General, SEC, Mr Lamido Yuguda, said this at the hybrid launch of the FMDQ Green Exchange by the FMDQ Securities and Exchange Ltd on Monday in Lagos.
He said that sustainable finance from investors and interest groups would help address Nigeria’s budget and infrastructure deficits.
Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.
He said that there was the need to incentivise market participants to be more conscious of long-term risks and opportunities.
“We believe that the huge budget deficit and infrastructure gap in the country can be financed by harnessing available finance from sustainable finance investors and interest groups globally,” Yuguda said
He added that improving access to retail investors and supporting institutional investors to direct their capital toward a long-term impact would boost economic growth and development.
According to him, the United Nations recognises that green financing plays a major role in delivering a number of its Sustainable Development Goals (SDGs).
He noted that the 2021 COP26 conference underscores transition to a low carbon, more resource efficient economy and building a financial system that stimulates sustainable growth across nations.
“For this to happen, the right conditions and incentives need to be in place, this includes incentivising market participants to be more conscious of long-term risks and opportunities.
“Improving access to retail investors and supporting institutional investors to direct their capital toward a long-term impact, enhancing trust in green financial products.
“Also, providing clean and clear information for those who invest in them and providing the necessary support and policies to create the environment for innovative ideas for green finance to thrive.
“SEC, on its part, tries to deliver coordinated and coherent policy advise, capacity building and regulatory support to build the momentum for a green economy.”
Yuguda disclosed that there were tremendous opportunities in the areas of power generation and transmission, rail transportation, housing and water, among others.
“Sustainable financing can be an avenue for the private sector to partner with government in the overall drive of prosperity and economic development.
“Although, the Nigerian capital market has recorded some green bond issuances, there is still ample room for additional issuances as stakeholders within the sector can do more in terms of green and sustainable finance,” he said.
Yuguda noted that the commission would remain an advocate of infrastructure development through sustainable financing.
The director-general who commended the FMDQ Group on the official launch of the Green Exchange described it as a notable milestone.
“FMDQ for some years now has earned itself a reputation for innovation in the Nigerian capital market with the introduction of new platforms, processes, innovations and even players,” Yuguda said.