Nigeria’s pensions body looking at developing sustainable investment guidelines

Move comes as Nigeria plans green bond issue

The Nigeria Pension Commission is working on pension industry sustainable investment guidelines, according to director general Chinelo Anohu-Amazu.
She was speaking last Friday at the London Stock Exchange at a high-level event involving a host of Nigerian dignitaries including Environment Minister Amina Mohammed and Fiannce Minister Kemi Adeosun.

The event, the third ‘London and Lagos Capital Markets in Partnership’ Conference celebrates a mutual agreement between the London exchange and the Nigerian Stock Exchange aimed at supporting African companies seeking dual listings in London and Lagos.

Anohu-Amazu, who worked on Nigeria’s 2004 Pension Reform Act, said the country’s pension regulator the Nigeria Pension Commission was interested in green bonds. “We won’t get involved in the creation but nudging so we can invest,” she said.

She continued that the regulator was working on pension industry sustainable investing guidelines so “we don’t use funds that are going to create more damage”.

Speaking on the sidelines, Anohu-Amazu reiterated to Responsible Investor that she was keen to get the Nigerian pension fund industry interested in sustainability.

Under her tenure total pension fund assets in Nigeria has grown to NGN5.2trn ($26.5bn) as of December 2015 with total membership count of 6.8m. With a population of over 180m the prospects of growth in the pension industry is huge where currently 21 pension fund administrators, four pension fund custodians and seven closed pension fund administrators are licensed and operate.

Another area of opportunity in Nigeria highlighted at the event was infrastructure. Adeosun said Nigeria currently did not have the infrastructure to spur the economy that was overly dependent on oil.

In a speech, where the former auditor for London Underground spoke about tackling corruption in Nigeria, sorting out its public finances and diversifying its economy; she also said its infrastructure needs were huge and it would need to crowd in private capital as it did not have the capacity in its budgetWhile, Adeosun, a London native, did not focus on green or sustainable infrastructure, her ministerial colleague Mohammed suggested this could be the direction Nigeria would take.

Mohammed, who played a central role in helping to define the UN Sustainable Development Goals, spoke about greening the Nigerian economy.

“The Nigerian Stock Exchange sowed the seeds. They talked to me about sustainability principles and what business could do. We though ‘hey what about green bonds’ – most people though it was ridiculous and wouldn’t happen.”

Mohammed continued that Nigeria was looking for an instrument that worked with its INDC – its ‘Intended Nationally Determined Contribution’ under COP21 – and its national strategy to bring jobs and green infrastructure investment.

She also said it was necessary for the idea to be attractive to President Muhammadu Buhari who was dealing with challenges such as conflict and jobs.

“Our plan to diversify from oil and diversify from jobs has blown up,” she said. “The last six to eight months have been huge challenges which we are trying to fix. And how now we look at energy mix and renewables. Green bonds support this as the [public] money is not out there to do this.”

Questioned by Responsible Investor on the details of the green bond, Mohammed said it would be issued in the first quarter of 2017. The size of the bond will be NGD20bn (€58m) and it will be a domestic bond issued by the Debt Management Office and Central Bank.

“It’s important to start at home,” she said. “ We will look at the process, criteria, what we are doing to certify green.”

She said proceeds would go to the transport sector, mass transit, renewable energy such as solar power and smart agriculture.

She said there had been interest in it launching an international green bond but there was push back. “It’s important to get it right. Then you can talk about scale.

“We are looking to international companies to think through metrics and rating agencies of green on how to not do green washing,” she said.