Federal Government of Nigeria Green Bond Series II Investor - - PowerPoint PPT Presentation

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Federal Government of Nigeria

Green Bond Series II Investor Presentation

May 2019

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Contents

Section Page

1. The Nigeria Economy 2 2. Global Green-Bond Initiative – Nigeria in Context 12

• 3. Recap of FGN’s Debut Green Bond Issuance

24 4. FGN Green Bond Series II Offer Summary 32 5. Key Credit Investment Highlights 39

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Section 1

The Nigeria Economy

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3 Source: World Bank, National Bureau of Statistics, Chapel Hill Denham Research

Credit Ratings (S&P / Fitch/Moody’s) B(Stable) / B+ (Stable)/B2 (Stable) Population (April, 2019)

• c. 199.61 million

Official Exchange Rate (NGN’: USD’): May 2019 306.90 : 1.00 Foreign Reserves (USD’) May 23, 2019 $45.07 billion Inflation: April 2019 11.37% Monetary Policy Rate : March 2019 13.50% Nominal GDP Per capita (USD’ ) 2018 $2,084.89 Nominal GDP 2018 $ 416.16 billion

Nigeria Macro‐Economic Overview

• Largest economy in Africa
• 10th

largest Oil Reserves and 9th largest Gas Reserves

• Resilient GDP growth – Expected Real GDP growth
• f 3.01% in 2019
• Large consumer class – personal disposable income

expected to grow by a CAGR of circa 4% over the next decade

• Prices

moderate as inflation has been

• n

a downward trend, but with slight uptick to 11.37% in April 2019

• Key policy reforms - including the implementation of

the Economic Growth and Recovery Plan (“EGRP”), import substitution and improved FX liquidity via the Investors’ and Exporters’ (“I&E”) Window

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Africa’s Largest Economy is Poised to Sustain its Economic Growth

Strong Governance and Transparency Focus (Anti-Corruption Drive) Oil and Gas Powerhouse Increasingly Diversified Economy Mature Political System Robust Debt Dynamics and Developed Domestic Fixed Income Securities Market Well-Regulated Banking Sector Enhancing Security Focus on Infrastructure, ICT Transformation Promoting Macroeconomic and Price Stability Improvement

• f Ease of Doing Business

since 2016 Strong Public Finance Management Reforms

Nigeria in Context

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National Economic Recovery and Growth Plan

Source: World Bank, National Bureau of Statistics, Chapel Hill Denham Research

The National Economic Recovery and Growth Plan (“ERGP”) was launched in March 2017, an initiative targeted towards achieving structural economic change and having a more diversified and inclusive economy. Strategic Areas

Macroeconomic Policy Economic Diversification and Growth Drivers Competitiveness Social Inclusion and Jobs Governance and

• ther Enablers

Objectives

Building a globally competitive economy Building a globally competitive economy Investing in our people Investing in our people Restoring growth Restoring growth

• Fiscal Stimulus and monetary policy
• External Balance of Trade
• Leveraging Science and Technology
• Increased Government Spending
• Social Inclusion
• Job Creation and Youth Empowerment
• Improved Human Capital
• Investing in infrastructure
• Improving the business environment
• Promoting digital-led growth

Implementation

• In line with ERGP’s commitment to stimulate and support the

economy, 30% of the 2019 Budget was allocated to capital expenditure

• The first Federal Government Sukuk was issued in September 2017

for the construction and development of roads to further promote infrastructure development, while a Second Sukuk was issued in December 2018.

• Financing infrastructure through the Presidential Infrastructure

Fund and Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.

• The ERGP Focus Labs was launched in March 2018 to mobilize the

private sector to develop key investment projects as well as implementation plans that will stimulate job creation.

• The ERGP Focus Labs expects to source and deploy $22.5 billion
• f private sector investments by 2020 across the agriculture,

transportation, manufacturing, solid minerals, gas and power sectors.

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Commitment to ERGP is Yielding Results

ERGP Supporting Diversification of the Economy

Stabilisation Continues with Improvement in External Reserves Gross External Reserves, USD bn1

Sources: National Bureau of Statistics, CBN, Bloomberg

87.10% 89.20% 93.60% 94.70% 91.30% 91.40%

12.90% 10.70% 6.40% 5.30% 8.70% 8.60% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2013 2014 2015 2016 2017 2018

Contribution to GDP : Oil and Non-Oil

Non-Oil Oil

20.0 25.0 30.0 35.0 40.0 45.0 50.0 10 11 12 13 14 15 16 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2019 Inflation MPR

5.31% 4.21% 5.49% 6.22% 2.79%

• 1.58%

0.82% 1.93%

2011 2012 2013 2014 2015 2016 2017 2018

Nigeria's GDP Growth

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Nigeria Key Economic Reforms Leading to Positive Outlook

Source: National Bureau of Statistics

Agriculture 26% Trade 16% Telecoms 10% Manufacturing 9% Oil & Gas 7% Real Estate 6% Others 26%

GDP Breakdown by Sector (2018)

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Nigeria’s Debt Management Strategy

Reduce debt service ratio by increasing revenue Lengthen the maturity profile

• f government debt

Ensure sustainable public debt and borrowing on a prudent and least cost basis Rebalance debt portfolio in favour of lower cost longer tenured debt

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Government Debt Remains Contained

12.70 12.70 13.00 16.40 18.20 19.09 2013 2014 2015 2016 2017 2018 18.2 64.9 103.0 71.8 54.2 48.3 53.0 63.1 Nigeria Angola Egypt Ghana Kenya Senegal South Africa Zambia

Debt remains at Sustainable Levels… Total Public Debt / GDP (%) …And One of the Lowest Debt Levels among African Peers 2017 Gross Debt / GDP (%)

• Debt Sustainability Analysis conducted annually to reaffirm that Public Debt Stock is

sustainable

• The Federal Government has continued to diversify its borrowing instruments with the

inclusion of Sukuk, Green Bonds, Savings Bonds and Diaspora Bonds

• Efforts are on to improve the Debt Service/Revenue Ratio which is an important focus

in our Debt Management

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Achieving an Optimal Debt Structure

Sources: Budget Office of the Federation, Debt Management Office,.

On Track to Shift Domestic Debt Portfolio to Long Term Maturities % of Total Domestic Federal Government Debt Rebalancing to Optimal External/Domestic Debt Mix % of Total Federal Government Debt

16.2% 17.1% 19.3% 23.9% 31.5% 31.8% 83.8% 82.9% 80.7% 76.1% 68.5% 68.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2013 2014 2015 2016 2017 2018 External Debt Domestic Debt

Fiscal Policy, Reforms and Debt Management

43.6% 42.4% 38.2% 35.3% 32.6% 22.0% 56.4% 57.6% 61.8% 64.7% 67.4% 78.0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2013 2014 2015 2016 2017 2018 Short term Medium and Long term

Exchange Rate: N307/USD

DEBT CATEGORY Amount Outstanding (USD'Mn) Amount Outstanding (N'Mn) A. Total External Debt 25,274.37 7,759,229.99 FGN Only 21,043.65 6,460,399.86 States & FCT 4,230.72 1,298,830.13 B. Total Domestic Debt 54,162.35 16,627,841.75 FGN Only 41,610.44 12,774,405.70 States & FCT 12,551.91 3,853,436.05 C. Total Public Debt (A+B) 79,436.72 24,387,071.74 Nigeria’s Total Public Debt Portfolio As At December 31, 2018 44% 12% 44%

% of Total External Debt - 2018

Multilateral Bilateral Commercial

Good Proportion of Concessional and Non‐concessional Borrowing

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Fiscal Discipline and Ongoing Initiatives to Improve Revenues

Prudent Fiscal Policy, with 2018 Budget Deficit Below 3% of GDP Budget Deficit as % of GDP

(1.32) (0.99) (1.62) (2.16) (3.35) (1.74) (1.33) (3.00) 2013 2014 2015 2016 2017 2018 2019 Budget

Reforms Supporting Increased Revenue Generation ₦ Bn, % of GDP

63.2 67.2 69.0 67.9 68.5 9.0 9.3 6.1 5.0 6.8 14.3% 13.8% 8.8% 7.4% 10.0%

0.0 20.0 40.0 60.0 80.0 100.0 120.0 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

2013 2014 2015 2016 2017 GDP Revenue (Oil + Non-Oil) Revenue / GDP

Sources: Ministry of Finance, Budget Office of the Federation, Ministry of Budget and National Planning.

 Broaden tax base and improve revenues (Federal and State Governments)  Revenue mobilisation initiative aimed at encouraging tax payers to regularise tax status through Voluntary Assets and Income Declaration Scheme (VAIDS) Improving Tax Revenues

• Improving Value Added Tax (VAT) collection
• 85% allocated to state and local governments
• Introduction of a Policy on Tax on select luxury items
• Increase in Excise Taxes on alcohol and tobacco
• Reforms of pioneer tax incentive regimes

Improving Non- Oil Revenues  Treasury Single Account implementation  Integrated Payroll Personnel System (IPPIS) implemented across several MDAs to improve public service productivity and increase government revenue  Establishment

• f

Efficiency Unit to cut costs and block leakages Efficiencies  Adoption of a 22-point Fiscal Sustainability Plan with the States as one of the measures to tackle the 2015-2016 fiscal crisis at the sub-national level following the decline in revenue  Presidential Initiative on Continuous Audit  Tighter performance management framework for SOEs Financial Sustainability  This was launched in January 2019 and focuses on increasing the Government’s Revenue through various initiatives such as increasing Customs Revenue and Expanding the Taxpayer Database Strategic Revenue Growth Initiative

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Section 2

Global Green-Bond Initiative – Nigeria in Context

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Climate Change – Nigeria in Context

Source: bioenergyconsult.com, USAid, NCF

100 / 180 Environmental Performance Index ranking (2018) 90% Total land area under some form of erosion Abuja 6th Highest Volume of Greenhouse Gas emissions via Gas Flaring 50-75%

• f 11 Northern states are

currently affected by desertification 70% Percentage of Nigeria’s workforce employed by climate-sensitive resources 32m tonnes Total amount of domestic waste per annum 96% Amount of forest cover lost in Nigeria till date 41m Number of Nigerians living in high climate exposure areas Among 6 West African countries expected to experience water scarcity by 2025 High risk 2016 Climate Change Vulnerability Index classification of Southern Nigeria Extreme risk 2016 Climate Change Vulnerability Index classification of Northern Nigeria

• In 2008, the World Bank

launched the “Strategic Framework for Development and Climate Change” to help stimulate and coordinate public and private sector activity to combat climate change.

• Green Bond was founded at

the UN Climate Change Conference in a bid to help countries transition towards a low-carbon economy

• Since 2008, the World Bank

has now issued USD 13 billion equivalent in Green Bonds through 150 transactions in 20 currencies

• As the investor base

continues to increase, regulatory pressures also aim to ensure that companies take into account Environment, Social and Governance criterias

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Source: environment.gov.ng

Aspect Commentary Objective Reduction from Business As Usual (“BAU”) Target year 2030 Implementation period 2015 – 2030 Base data period 2010 -- 2014 Economic and social impact Economic and social development:

• grow the economy by 5% annually
• improve the standard of living
• electricity access for all

Unconditional & conditional objectives 20% unconditional; 45% conditional Key measures

• Work towards ending gas flaring by 2030
• Work towards off-grid solar PV of 13,000 MW
• Efficient gas generators
• 2% per year energy efficiency (30% by 2030)
• Transport shift car to bus
• Improve electricity grid
• Climate smart agriculture and afforestation

Estimated emissions per capita

• Current: around 2 tonnes CO2e
• 2030 BAU: around 3.4 tonnes CO2e
• 2030 Conditional: around 2 tonnes CO2e

Global warming potentials used IPCC Fourth Assessment Report Gasses covered CO2; N2O; CH4 Emissions as a percentage of global total <1% (2010) Historical emissions (1850 – 2010) 2,554.02 million tonnes

 At the Convention on Climate Change held in Paris, Nigeria committed to reduce carbon emissions by 20% unconditionally and

45% (compared to business as usual) with international support by 2030, through select projects classified under “Nationally Determined Contributions (NDCs)”.

Nigeria’s Response to Climate Change

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Ensure that the Federal Government (FG) integrates periodic issuance of green bonds into its borrowing plan



Ensure the FG has adequate capacity to monitor the use of issuance proceeds and the development of projects consistent with the Green Bond guidelines



Provide support to the FMEnv in its implementation of the Green Bond guidelines to maintain a transparent & consistent process



Coordinate capacity building across FG MDAs in the identification

• f green projects and leverage resources from development

partners



Develop a framework for collating/reviewing reports on green bond project performance from the FG



Conduct a diagnostic assessment of selected projects to confirm minimum compliance with the green bond guidelines

Scope of the Advisory Assignment Composition of the GB-PPSAG Overview



The Federal Ministry of Environment (“FMEnv”) in collaboration with the Federal Ministry of Finance (“FMF”) has devised frameworks to guide and support the issuance of green bonds to fund eligible climate projects in Nigeria



Work streams that were completed in furtherance of this initiative included:

― Development of guidelines ― Identification of qualifying projects ― Establishment

• f

an Inter-Ministerial Committee

• n

Climate Change comprising of key applicable MDAs



Key requirements for a sovereign green bond issuance include: ― The projects should be green in nature ― Project costs should form part of the Medium Term Sector Strategies (MTSS) of selected MDAs ― The project should have a defined revenue model or economic impact that generates resources that will be used to service the green bond ― The emissions contributions of the projects should be calculated and documented



The FMEnv also set up a Green Bond Private Public Sector Advisory Group (“GB-PPSAG”) to support this process ― The GB-PPSAG comprises of development partners, relevant regulators, capital market operators and MDAs



The process should enable Nigeria tap into the growing global market for green bonds totaling USD250bn in 2018 Stakeholder Group Representatives Federal Government Agencies FMEnv, FMF, DMO Regulators PENCOM, SEC, NAICOM, The NSE Capital Market Operators Capital Assets, Chapel Hill Denham, Rand Merchant Bank Nigeria Limited and Stanbic IBTC Capital Limited Development Partners World Bank, IFC, AfDB

Federal Ministry of Environment’s role in meeting Nigeria’s NDCs

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What are Green Bonds?

Green bonds are bonds used exclusively to fund projects that have specific environmental and/or climate benefits

Source: Climate Bonds Initiative

■ Green Bonds can also be defined as debt instruments issued to raise capital to fund specific clean power projects or projects aimed at reducing climate change risk ■ They arose out of investors’ need to invest in high-growth, clean energy sector projects other than through equities and funds ■ The implementation of green bonds does not require the debt recourse or financial backing to be necessarily tied to a specific green project. As such… ■ …majority of green bonds in circulation are green “use of proceeds” bonds and are backed by the issuers’ entire balance sheet… ■ …this allows investors to benefit in investing in green initiatives without taking the additional risk of the success or

• therwise of that specific green project, as the bonds are still backed by the issuers’ balance sheet

■ The total value of green bonds issued worldwide in 2018 was USD167bn ■ The global market for all wider labelled green bonds was c.USD226bn by the end of 2018 and is expected to reach USD1trn by 2020 ■ Green Bonds can be issued by any entity that can issue bonds such as Countries, States, Corporates, banks and Government Agencies ■ Green Bonds were launched by a few development banks, with issuances by the European Investment Bank in 2007 and the World Bank in 2008 ■ By 2013, other issuers - corporates and municipalities - started participating in the green bond market

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Assets that Qualify for Green Bonds

Water



Flood defences



Water distribution infrastructure



Water capture and storage infrastructure



Water treatment plants



Assets in energy and production industries Energy



Solar



Wind



Geothermal



Hydropower



Bioenergy



Wave & Tidal



Energy management



Dedicated Transmission Nature based assets



Agricultural land



Forests



Wetlands



Degraded lands



Fisheries and aquaculture



Coastal infrastructure ICT



Power management



Broadband



Resource efficiency



Teleconferencing Low carbon buildings



Residential



Commercial



Retrofit



Products for building carbon efficiency Transport



Rail



Vehicles



Mass transit



Buss Rapid Transport (BRT)



Water-borne transport



Alternative fuel infrastructure

Qualifying Green Bond Assets

Energy Low carbon buildings Transport ICT Nature based assets Water

Source: Climate Bonds Initiative

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Use of Proceeds (UOP) Reporting Management of Proceeds Process for Project Evaluation and Selection



Adequate disclosure in the prospectus



Eligible Projects provide clear environmental benefits



Provide split between financing and refinancing usage



The Federal Government has

• utlined a process to determine fit

within the eligible project categories, the eligibility criteria and sustainability objectives of the projects



Maintain high level of transparency



External review completed through Moody’s in the form of a Second Party Opinion



Net proceeds to be tracked to green projects via an appropriately designed internal

• process. FMEnv, DMO & OAGF to oversee

the process



This is to be done by crediting the proceeds to a sub-account or a sub-portfolio or

• therwise



Periodic adjustment to match allocations to eligible Green Projects



Investment of unallocated proceeds into liquid money market instruments



Verification of the internal tracking of proceeds is recommended



Issuer will report at least annually via newsletters, website updates or financial reports



Details of investments in specific projects



Reporting of quantitative impact and qualitative performance is recommended NDC Themes for Eligible Projects

Energy Efficiency Resource Efficiency Renewable Energy Clean Technology Sustainable Forest Management

Green Bond Principles and Guidelines

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An Inter-Ministerial Committee on Climate Change has undertaken the selection of Eligible Green Expenditures Nigeria Government Budget Potential Green Bond Projects Potential Green Bond Expenditure Eligible Green Expenditure Supervisory agencies

Ministry of Finance Ministry of Environment Ministry of Finance Ministry of Environment Inter‐Ministerial Committee on Climate Change Federal Capital Territory Authority Ministry of Agriculture & Rural Development Screening based on budget documents and Ministry of Environment Green Bond Guidelines

The Green Bond Guidelines have been used as a guiding reference for the selection process as well as the target in the NDCs. Each ministry has been responsible for identifying eligible green expenditure within its programmes. The Inter-ministerial Committee on Climate Change has excluded activities that do not comply with Moody’s 2nd Opinion standards.

Assessment by Green Bond Program Technical Advisory Team Final validation Ministry of Power, Works & Housing Ministry of Transport Ministry of Water Resources Ministry of Environment

Selection Process for Eligible Green Expenditure

Selection Process for the Eligible Green Expenditures

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The Green Bond Process

DMO FME

Legend 1. MSAs through ICCC/FME identify projects with green credentials 2. FME communicates to MoF the existence of a pool of green projects for funding 3. MoF instructs DMO to begin process of issuance 4. DMO communicates to OAGF to establish account that will hold resources 5. DMO issues notification to market of plans to issue a green bond 6. OAGF communicates to CBN the new account details 7. MDAs inform MoBNP of projects that will be funded by the green bond 8. CBN funds green bond account with proceeds of issuance 9. MoBNP links GB Account with projects

• 10. Green Bond account disburses to the projects based on MDA requests

OGAF Capital Market Operators MoF CBN MoBNP Green Bond Account Green Bond Projects

MDAs

1 2 3 5 4 6 9 8 7 10 10

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Project Review Approach

Project Description, Rationale, Financial Model

• Financial projections based on

assumptions from MDA focal persons

• Calculation of IRR based on

projections

• 2017 Federal Budget inclusion

Environmental Impact and Emissions reduction

• Assessment of noise and

pollution reduction levels

• Calculation of contribution to

emissions reduction Economic Impact and ERR

• Reflows to government
• Taxes from projected

employment

• Savings to government from

implementation Safeguards

• Gender and youth impact
• Social and security benefits
• Linkages with the World

Bank/IFC Performance Standards/SDGs

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Administrative Structure of the Green Bond Account

MoE OAGF DMO Admin: CBN Green Bond Account Account Trustees Project 1 Project 2 Project 3 Projects Reports Funds

Reporting Management Administration

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Source: environment.gov.ng

FMEnv’s Ongoing Climate Initiatives

Federal Ministry of Environment by a Program 47 activity in

partnership with the Ministry of Finance issued the first Sovereign Green Bond in Africa to fund environmental projects that cut across multiple sectors in the Federal Governments annual

• budget. The issuance succeeded in partially funding the NDCs,

greening the FGN budget and creating a green component of the Nigerian Capital Market. FMF & FMEnv at the World Bank spring meetings joined 32 countries in endorsing the Helsinki Principle which will bring public finance and climate action together

The Climate Finance Accelerator, supported by the UK and

Nigeria governments aims to speed up the identification and execution of investable climate-related projects in Nigeria. It is designed both to identify actual potential financing

• pportunities and to create learning experiences for project

developers, financiers and policy makers that can be widely disseminated

An ongoing initiative to ensure a coordinated approach across

FMEnv agencies that have mandates that impact the forest

• cover. Hectarage covered in 2017 was 841.6 Ha while 2018

coverage is projected at 334 Ha resulting in emissions reduction of 4,938 Co2 tons.

The Federal Government of Nigeria (FGN) has initiated the

Ogoni Clean Up program to internally reconcile the Ogoni people and ensure the clean-up and remediation of past oil impacted sites in Ogoni land.

A Pan-African Initiative conceived to address land degradation

and desertification, boost food security and support communities to adapt to climate change in the Sahel-Sahara region of Africa

Created to address on a multi-dimensional scale, the menace

• f gully erosion in South East Nigeria as well as land

degradation in Northern Nigeria

Green Bond Series 1 Afforestation Program Ogoni Clean Up Climate Finance Accelerator Program Nigerian Erosion and Watershed Management Project 1 5 3 2 4 6 Great Green Wall Programme

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Section 3

Recap of FGN’s Debut Green Bond Issuance

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Pension Fund Administrators 73% Government Agencies 14% Banks 9% Other Non- Bank Financial Institutions 2% Fund Managers 1% Individuals 1%

The debut Green Bond was well received by investors and was oversubscribed, with total subscriptions of N10,791,000,000.00 (101% )

Issuer: Federal Government of Nigeria Financial Adviser: Chapel Hill Denham Advisory Limited Certification: Climate Bond Certified Ratings: GB1 (Excellent) by Moody’s Investors S ervice Instrument: Green Bond Issue Size: N10.69 billion Coupon Rate: 13.48% payable semi-annually Par Value: N1,000/ unit Tenor: Five (5) Y ears Repayment: Bullet sum at maturity Use of Proceeds: (i) Renewable Energy Micro-Utilities; (ii) Energising Education Programme; and (iii) Afforestation Programme Security: Backed by the full faith and credit of the FGN Status: Ranks pari passu with other FGN Debt

• bligations

Issue Date: December 22, 2017 Maturity Date: December 22, 2022

Case Study: Nigeria’s Debut Green Bond

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Nigeria’s Debut Green Bond Issuance: Use of Proceeds

Project Themes MDA-Project Commitment =N= (m) % of Total Renewable Energy RRD - REMU 146.07 1.37% REA - EEP 8,553.60 80.01% Afforestation DDA - Afforestation 230.40 2.16% GGW - Afforestation 814.78 7.62% FRIN - Afforestation 719.84 6.73% NPS - Afforestation 225.32 2.11% Total 10,690.00 100.00%

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Ndufu Alike University (Ebonyi State) Pr

• je c t Site

(E E P)

Afte r Site Pr e par ations (F e nc ing Comple te d) Be for e Site Pr e par ations Afte r Site Pr e par ations (F e nc ing Comple te d)

Bayero University (Kano State) Pr

• je c t Site

(E E P)

Solar Pane ls be ing Mounte d Be for e Site Pr e par ations

Nigeria’s Debut Green Bond: Progress Photos

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Afte r Site Pr e par ations (F e nc ing Comple te d) E quipme nt F

• undation Wor

ks Be for e Site Pr e par ations

University Petroleum Resources (Effurun Delta State) Pr

• je c t Site (E

E P)

Be for e Site Pr e par ations Installation of c onc e r tina wir e on pr

• je c t site

fe nc e (F e nc ing Comple te d)

Abubakar Tafawa Balewa University (Bauchi State) Pr

• je c t Site (E

E P)

Solar Pane ls be ing mounte d

Nigeria’s Debut Green Bond: Progress Photos

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Afte r Site Pr e par ations (F e nc ing Comple te d) E quipme nt F

• undation Wor

ks Be for e Site Pr e par ations

Nnamdi Azikiwe University (Anambra State) Pr

• je c t Site (E

E P)

Be for e Site Pr e par ations

Torankawa Vilage (SokotoState)

Pr

• je c t Site (R

E MU)

E quipme nt F

• undation Wor

ks Afte r Site Pr e par ations (F e nc ing Comple te d)

Nigeria’s Debut Green Bond: Progress Photos

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Nigeria’s Debut Green Bond: Progress Photos

FRIN Location (Niger State) NPS Location (Edo State) GGW Location (Kano State) DDA Location – Gnangere/Potiskum (Yobe State)

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EEP ‐ Bayero University Kano – 3.5mw

• One of 7 locations

across the country to benefit from the green bond program

• Total student

population for the 7 locations is 114k

• Student population at

BUK is 31,462

• Total capacity of the

installed locations will be 12.5MW

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Section 4

FGN Green Bond Series II Offer Summary

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Issuer: Federal Government of Nigeria Format Fixed Rate Notes Status of the Notes Direct, unconditional, general and unsecured obligations of the FGN and shall rank pari passu with all other outstanding unsecured and unsubordinated obligations of the FGN Currency Nigerian Naira (“ NGN” ) Issue Size Up to NGN15 billion Green Bond S eries II Issuance Rating GB1 (Excellent) by Moody’s Investors S ervice Tenor 7 years Coupon [TBD] Use of Proceeds “ Green Proj ects” as selected by the Inter-Ministerial Committee on Climate Change (ICCC) of the Federal Ministry of Environment and approved under the Appropriation Act 2018 Listing The Nigerian S tock Exchange & FMDQ OTC Plc Clearing and settlement Central S ecurities Clearing S ystem Minimum Denomination / Increments NGN10,000,000 / NGN1,000,000 increments Tax Exempt The Green Bonds is a tax exempt investment and is exempt from all taxes; including the companies income, personal income, capital gains and value added taxes Governing Law Laws of the Federal Republic of Nigeria

Summary of the Green Bond Issue

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Nigeria’s Green Bond II Issuance: Use of Proceeds

SNo. Ministry Cost N'Million NDC Themes 1 Federal Ministry of Environment 1,220.88 Adaptation 2 Federal Ministry

• f

Agriculture & Rural Development 600.00 Adaptation 3 Federal Ministry of Power, Works & Housing 8,264.00 Mitigation 4 Federal Ministry of Transport 500.00 Mitigation 5 Federal Capital Territory Authority 1597.12 Mitigation 6 Federal Ministry of Water Resources 2,818.00 Mitigation and Adaptation Total 15,000.00 2018 FGN Green Bond Sectors, Amounts and NDC Themes

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Ministry of Environment  Targeted at increasing power

generating capacity of the country via;

 Optimization of a 10MW Windfarm in

Katsina State

 The Construction of a 0.1 MW Off-

Grid Renewable Energy plant (solar)

 The construction of 0.75MW Solar

Mini-Grids for selected federal government buildings

 The development of solar hybrid

plants total capacity up to 12.5MW to provide power to 7 federal universities across the country

 1,752 jobs are expected to be created

from the implementation of the power projects with economic returns of between 0.25-7.23% per annum

 The project will be funded with

NGN8.26bn and is expected to generate revenue from taxes on electricity tariffs and service charges

Ministry of Power, Works & Housing  Aims to increase forest coverage

through the plantation of seedlings to cover 334 hectares of land in 31 states and the FCT

 Establishment of Acacia Senegal

Plantation in the frontline states to arrest land degradation

 Establishment of woodlots in arid

zones, ecological restoration of degraded areas

 Restoration of degraded areas in Old

Oyo National Park

 Ecological restoration of degraded

areas of Chad Basin National Park

 Ecological restoration of degraded

areas in Cross River National Park

1 2  Ecological restoration of degraded

areas of Kainji Lake National Park

 Ecological restoration of degrade

areas in Okomu National Park

 Ecological restoration of degraded

areas of Gashaka Gumti National Park

 8,579 jobs are expected to be created

by the implementation of these projects, with the provision of economic returns at the rate of 1.62% per annum

 Total cost to be funded is NGN1.23bn

Nigeria’s Green Bond II Issuance: Use of Proceeds

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 The second issuance of the Green

Bond will fund agro-forestry projects which will contribute to a reduction of Nigeria’s carbon emissions by 1,680 metric tons.

 Pilot demonstration on agro farmers

managed regeneration and conservation agriculture practices for improved food security and livelihood

 4,200 jobs are expected to be

created from the implementation of this project with economic rates of return of 3.77% per annum

 NGN0.6bn of the issuance will be

allocated to implementation of the projects

Ministry of Agriculture  The 2018 issuance of the Green

Bond has outlined one project to fulfill the transport sector plans

 Procurement of 500 solar powered

tricycle and amphibious vehicles.

 It will result in emissions reduction of

3,303 metric tons per annum.

 1,050 jobs are expected to be

created from the implementation and execution of this project will provide economic rates of return of 7.03% per annum.

 NGN0.5bn of the project cost will be

funded from the issuance

Ministry of Transport 3 4

Nigeria’s Green Bond II Issuance: Use of Proceeds

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37

Nigeria’s Green Bond II Issuance: Use of Proceeds

Ministry of Water Resources 6  Construction of 5,950 hectares of

irrigated land across the nation with the sum of NGN2.82bn

 Supply and irrigation of pressurized /

centre pivot irrigation systems nationwide

 Tada-Shonga Irrigation Project  Construction of Middle-Ogun Irrigation

Project

 Rehabilitation of Adani Irrigation

Project

 18,445 jobs are expected to be

• created. The Economic rate of return

for these projects is 2.43% per annum.

 The expected emissions reduction is

515 metric tons per annum.

 This project is geared towards the

development of the critical infrastructure for rail in the FCT.

 Under the 2018 Green Bond

issuance, NGN1.59B will be committed towards the construction

• f Abuja Rail Mass Transit Project Lot

1 & 3 to address these issues.

 This investment will create a total of

11,175 jobs and provide an economic rate of return of 0.67% per annum.

 This will project will result in

emissions reduction of 25,675 metric tons per annum.

Federal Capital Territory 5

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38

Use of Proceeds- Allocation (%) Process for Project Evaluation and Selection1.15 Management of Proceeds Reporting Refinancing (0%) New Projects (100%) Inter-Ministerial Committee on Climate Change Green Bond Program Technical Advice Team Assessment Due Diligence Screening Nominate Projects

• Department for Climate

Change

• Debt Management Office
• Development Partners
• Capital Market Operators

Green Bond Advisory Group Bond ISIN Amount Disbursed Unique tagging Asset /Project Details Project Budget ID Investment of un-utilized funds Renewables Afforestation GHG Emissions Avoided Economic Impact Dedicated Register

Putting the Principles to Practice

Transportation

SLIDE 40

Section 5

Key Credit Investment Highlights

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40

Pioneering issuance in Nigeria and West Africa Two-fold contribution to the preservation of Nigeria’s climate and economic development Sovereign credit risk exposure Backed by the full faith

• f the FGN and

charged against the general assets of Nigeria Provides competitive investment returns relative to conventional bonds Segregation of issue proceeds and application towards ring-fenced projects

Key Credit Investment Highlights

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41

Thank you Thank you