Nigeria has become the first African nation to issue a sovereign green bond, and the fourth internationally. In what will be another record year for green bonds, the largest African economy and most populous country on the continent has issued a 5-year NGN10.7 billion (US$30 million) note. The tranche is the first in what is anticipated to be a NGN150 billion (US$420 million) programme. The proceeds will be used to fund projects in the 2017 national budget, which include renewable energy and afforestation activities.

This issue is the culmination of a journey that began on the margins of the United Nations Environment Assembly in Nairobi, Kenya, in May 2016. Amina J. Mohammed, then Nigeria’s Minister of Environment and now Deputy Secretary-General of the United Nations, floated the idea of a green bond that had first been proposed by the CEO of the Nigerian Stock Exchange to a small group of key stakeholders who were attending the Assembly.

The backdrop to the conversation was a growing recognition that the conversation over financing the Sustainable Development Goals (SDGs) and Paris commitments on climate was evolving. Clearly the importance of Official Development Assistance and the commitment made by developed countries to deliver at least US$100 billion per annum by 2020 was necessary, but it was increasingly evident it would not be sufficient. The Addis Ababa Action Agenda on Financing for Development in July 2015 had also reinforced the importance of broadening the lens in recognition of the need to tap private capital in pursuit of sustainable development.

In parallel to this conversation, there was a growing awareness – in part surfaced by work of the UN Environment Inquiry – that many developing and developed countries were taking steps to align their domestic financial and capital markets with sustainable development outcomes. This theme was also taken up at the international level, most notably by the inclusion of green finance on the G20 agenda under the China and German Presidencies. Momentum at the national, regional and international level was starting to catalyse change in financial markets, with the emergence of more capital being managed with sustainable considerations, and new funds, new products, new tools and new networks all evidence of a change in sentiment.

Nigeria leveraged the global momentum and innovation to issue what is on one hand a first product of its kind. It has leveraged domestic capital pools to help achieve its national sustainability priorities. However, when viewed through another lens, it is clear that the bond has sparked a journey of transformation.

Beyond merely issuing a new financial product, the process has brought together government ministries who historically have not had to work as closely together. It has increased the visibility of the private finance community in the sustainability conversation. It has forced debate over what sustainability means for Nigeria. New guidelines on green securities have been produced, which lay the ground work for more issuance to come. The bond has led to conversations about what comes next. The rock that was thrown into the pond in Nairobi in May last year is starting to produce ripples, and we sincerely hope they become waves.