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FMDQ launches green exchange initiative

FMDQ Securities Exchange has launched its first green exchange, to enable it tap into the many opportunities in the green and sustainable finance market.

This is even as the FMDQ Group signed a partnership with the Luxembourg Green Exchange (LGX), to promote the dual listing of securities and spot lighting green and sustainable securities.

Lagos State Governor, Babajide Sanwo-Olu, in his keynote at the launch, said the green exchange is a step in the right direction for mainstreaming finance and development in Africa, adding that this is a big win for Nigeria against the backdrop of the ongoing United Nations (UN) Conference of Parties (COP26) Climate Conference, in Glasgow, Scotland.

Sanwo-Olu, represented by his Special Adviser on Sustainable Development Goals (SDGs) and Investments, Solape Hammond, noted that the LGX, being the first green exchange, has since become to the world’s leading platform for sustainable securities issuing about 50% of green securities in 32 currencies.

Sanwo-Olu said: “As of August 2020, the LGX displayed 796 green, social and sustainable securities totalling $356 billion. And as the first green exchange to be launched in Africa, we see the potential impact that the FMDQ green exchange can also have in solving our most pressing problems and we urge them to deliver no less than a similar level of leadership and a greater success story for the region. Nigeria has committed to the SDGs and the net zero agenda and rightly so because to achieve these lofty goals, funding is required.”

The Governor however argued the success of the green exchange requires public-private partnership, as public funding alone is not enough, as private capital needs to be mobilized to reach the objectives defined in the Paris Agreement and the UN SDGs.

“The financial sector will therefore need to play a vital role in accelerating local market ability to provide the required support. It is just this opportunity that FMDQ green exchange is embracing and creating by expanding green blue sustainability funding options as alternative options of funding for projects and assets not just in Lagos but across the African region,” Sanwo-Olu said.

He added that the launch of the green exchange will open up new options for unlocking sustainable investment opportunities for investors.

The FMDQ green exchange, which is Africa’s foremost green exchange, will provide a one-stop depository for all green and sustainable debt securities listed on FMDQ. This will in turn afford issuers with increased visibility throughout the life of these securities.

Leveraging benefits

Earlier in his opening remark, the Chief Executive Officer, FMDQ Group, Bola Onadele, said the group recognizes the role it plays in the Nigerian financial market and the opportunities its business represent in promoting sustainable economic growth and development.

It therefore understands that the delivery of long term business success, value creation and prosperity is not only hinged on financial but also environment and social performance.

Onadele said the FMDQ green exchange, which is Africa’s foremost green exchange, will provide a one-stop depository for all green and sustainable debt securities listed on FMDQ. This will in turn afford issuers with increased visibility throughout the life of these securities via the publication of relevant information and data.

Also commenting, the Director-General, Debt Management Office (DMO), Patience Oniha, said the current trend, going by the speech with which governments and corporate organisations are adopting ESG (environmental, social and governance) suggests that there will be an increase in demand for funds to finance infrastructure projects.

She therefore stressed the need for more awareness and more pressure on the government to look at those projects.

Oniha said: “It means we have to raise funds in our own case. Revenues will be there but we may also need to borrow to finance those projects and this means that we will be issuing securities that comply with those requirements. It means that our initial activity, the domestic green bond market, should increase.”

To this end, she said Nigeria will still need to continue borrowing, saying: “While we have a total of N25.69 million outstanding, we still plan to be in the market sometime next year. Going forward, the FG would be an active issuer in the FMDQ green exchange, and what we need to do is to do a lot of sensitization to make those projects approved and the funding arrangement.”

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