Photograph — Market Digest Nigeria

The Nigerian Stock Exchange (NSE) has recently entered an agreement with a major player in sustainable financing, the Luxembourg Stock Exchange (LuxSE). Signed by the Chief Executive Officers of both bourses, the deal will see them work together in promoting cross-listing and trading of green bonds across the African and European nations.

Similar to traditional bonds, green bonds have an additional social and sustainable feature of allowing the funding of climate change projects with positive social spin-offs.

“This collaboration reinforces NSE’s drive to foster the growth of sustainable finance in Nigeria,” said Oscar N. Onyema, CEO of NSE. “With the MoU, issuers will enjoy the benefit of increased visibility through the cross-listing of their securities in Nigeria and Luxembourg.”

As provided for under the Memorandum of Understanding (MoU), the two exchanges will also collaborate in sharing best practices and organizing joint initiatives in their respective markets as the green bond initiative gains traction globally.

“Sustainable finance is becoming a truly global movement… We are pleased to cooperate with the Nigerian Stock Exchange to further strengthen sustainable finance in and between our markets,” LuxSE CEO, Robert Scharfe added.

L-R: (siting) Robert Scharfe, CEO, Luxembourg Stock Exchange; and Oscar Onyema, CEO of the Nigerian Stock Exchange (NSE) during the signing of the green bond agreement at the annual meeting of the World Federation of Exchanges in Singapore. October 9, 2019. Photo credit: Nairametrics

Big win for sustainable financing in Nigeria

The green bond market in Nigeria, Africa’s biggest economy, gained global attention after the Federal Government in December 2017 listed a ₦10.69 billion sovereign green bond on the Lagos-based exchange.

Significant interest from international and local capital market communities followed the issuance, as it opened new investment opportunities to increase investors’ exposure to financial tools that generate social and environmental impact.

According to Onyema, the partnership with LuxSE will further facilitate the growth of the green finance industry in Nigeria. This is particularly because the European bourse is a market leader in sustainable financing.

LuxSE became the first exchange in the world to operate a platform dedicated entirely to sustainable financial securities after launching the Luxembourg Green Exchange (LGX) in 2016. Through LGX, LuxSE holds 50 percent global market share of listed green, social and sustainability bonds.

Considering its role as a significant player in the relatively new market, the Exchange works closely with stock exchanges around the world to support the growth of sustainable finance.

“By joining forces with other exchanges to promote and facilitate green finance, we strive to accelerate the sustainable finance agenda and increase awareness of and interest in investment projects that support the sustainable development that our world needs,” the LuxSE CEO added.

Ultimately, the agreement comes with a huge chance of deepening the Nigerian capital market through the mobilization of the foreign green capital needed to fund sustainable projects in Nigeria, Onyema adds.

In other words, proceeds from the instruments can be used to invest in eco-friendly projects in the country, contributing to the attainment of the United Nations Sustainable Development Goals (SDGs).

The Luxembourg Stock Exchange (LuxSE) is believed to be the gateway to access international investors. The bourse is one of the world’s leading exchanges for the listing of international financial securities with more than 35,000 listed securities, including more than 29,000 bonds, from 3,000 issuers in 100 countries.

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