Four Years After, Nigeria’s Green Bond Projects Fall Below Expectations

On December 12, 2015, Nigeria alongside 195 other parties endorsed the Paris Agreement pact. The move re-echoed Nigeria’s readiness to follow the path of low carbon development in order to curb the devastating impact of climate change in the country by 2030.

For this to come to fruition, the federal government through its ministry of environment rolled out several policies and initiatives in its efforts to implement the Paris Agreement pact.

At the fifth anniversary of the Paris Agreement, organised by the Federal Ministry of Environment and Petroleum Technology Development Fund, (PTDF) in collaboration with the French government in Abuja last year, the then minister of environment, Mohammad Abubakar, said as a result of the initiatives put in place, they were financing green projects across the nation in various sectors of the economy.

The minister explained that the government was also engaging in afforestation programmes aimed at establishment of forests or planting of trees in order to avoid land degradation.

However, despite the government’s professed commitment to sustainable projects, findings have shown that some of the identified projects implemented under the country’s historic green bond projects within the past four years were poorly executed and are not serving their purposes.

Green Bonds

In 2017 and 2019, Nigeria issued two green bonds worth N10.69 billion and N15 billion respectively, becoming the first African country and the fourth in the world to raise a debt instrument entirely for the purpose of financing sustainable environmental projects.

The objective of the bond was to fast track Nigeria’s low carbon development pledges as enshrined in the Nationally Determined Contribution document submitted to the United Nations Framework Convention on Climate Change.

It offered the country an opportunity to demonstrate leadership in its green financing agenda, while giving exposure to new investors and solidifying the country’s commitment to the Paris Climate Change Agreement which was endorsed in 2015.

Some of the several projects funded from the proceeds of the bonds was the restoration of degraded areas in about nine states and the installation of renewable energy in 37 tertiary institutions across states in the country.

According to the environment ministry’s Department of Climate Change, eligible projects captured under the green bond projects were identified and selected from the federal government appropriations of the corresponding years.

However, while it is believed that the green bond issuance presents Nigeria with an opportunity to pursue a low carbon pathway for socio-economic development in line with the Economic Recovery Growth Plan (ERGP) and attract new investors and solidify the country’s commitment to Paris Climate Change Agreement, the spate of poor implementation of green projects captured under the historic green bond continues to raise eyebrows.

Not yet “uhuru”

It is unclear how much has been spent from green bond proceeds on green projects across the country so far. A letter requesting information under the Freedom of Information (FOI) laws was sent to the Ministry of Environment and its Department of Climate Change(DCC), in September. None was responded to as of the time of filing this report.

Information on projects captured under the green bond posted on the DCC website is vague, ambiguous and does not command transparency and accountability, which robs many Nigerians from understanding the full implementation status of projects done so far.

For instance, PREMIUM TIMES report had exposed how afforestation projects were poorly implemented in Old Oyo National Park despite gulping N30 million from the green bond treasury.

Similarly, another report shows how renewable energy projects meant to serve over 55,815 students and 3,077 staff members at the Bayero University Kano, fell short of expectations, following the installation of the 7.1 megawatts solar hybrid power plant, launched September 3, 2019

Razaq Fatai, a policy manager with One Campaign, said the issuance of green bonds by the federal government was the right step to finance the much-needed transition to a greener and sustainable economic development. “But not much has been achieved with the proceeds of the bonds. Since 2017, we haven’t seen a significant outcome,” he added.

He said only two solar power plants have been inaugurated at two institutions out of the nine universities under the energising education programme phase one project and that only one is functioning.

The policy manager said most of the agro-ecology projects under the bonds are difficult to track because of unclear project descriptions. He said that evidence from field surveys shows poor community engagement in project development and implementation, which could undermine the sustainability of the projects, especially those related to agroforestry.

Mr Fatai said he joined a team to track an agroforestry restoration project in Old Oyo National Park this year, and that his team concluded that the project would deliver no value for the money invested in it because the project does not mirror what it was reported to be by the Government- “restoration of degraded areas”.

Also, he explained that most of the crops planted will never grow to maturity due to poor management and inadequate irrigation system, while most of the planted trees are perceived to be less beneficial to the host communities.

David Michael, Executive Director, Global Initiative for Food Security and Ecosystem Preservation (GIFSEP), said he is aware that the proceeds from the green bond issuance are project tied but that he cannot point finger at any significant project done so far in that regard.

“If you observe, the green bond was issued when Amina Muhammed was the minister of environment and as soon as she left, I don’t think there’s nobody talking about it anymore,” he said.

Mr Michael, a climate change activist based in Abuja, commended the green bond initiative and that Nigeria raised enough money, but that it is a function of how money raised was used.

Asked if he can identify any significant milestone that has been achieved as a result of the green bond issuance and climate friendly projects done so far, Mr Michael said the only milestone for him is the money raised via the green bond issuance itself and that he has not seen the practical relevance of the money.

Key recommendations

Mr Fatai said that for Nigeria to get more value from future green bonds and that there is a need to see more transparency in the selection and implementation of green projects in Nigeria from now on.

“Government should engage communities early on in project development and implementation. Citizens should be able to follow the money, and the Government should ensure transparent selection of contractors and timely release of project funds,” he added.

On his part, Mr Michael said the government needs to showcase more transparency and accountability in the spending of funds in this regard.

“It is not enough to just say money from the bonds would be used for climate related or environmental related projects, we need to know the specific projects, amount of money earmarked for them, duration of completion (start-finish) and the monitoring strategies,” he said.

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