Why LDCs should emulate Nigeria’s Sovereign Green Bonds

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For the millions of men, women and children living in the Least Developed Countries (LDCs), development is one of the most urgent of human rights imperatives.

Development is a human right for all individuals and peoples. The formulation of development as a right is based on the idea that it is not merely an equivalent to economic growth.
To achieve development, President Muhammadu Buhari has called on LDCs to emulate Nigeria’s issuance of two Sovereign Green Bonds that raised over N30 billion for the purpose of financing sustainable environmental projects.
Least developed countries are low-income countries confronting severe structural impediments to sustainable development. They are highly vulnerable to economic and environmental shocks and have low levels of human assets.
Speaking at a UN Conference on LDCs in Doha, Qatar, Tuesday, the President urged the world’s most vulnerable countries to initiate and adopt effective homegrown resource mobilisation strategies and support same by a well-developed action plan.
‘‘Domestic resource mobilesation is likely to break the yoke of difficulties in accessing funds from developed countries’ financial institutions, like Nigeria’s issuance of two Sovereign Green Bonds that raised over N30 billion,” he said. ‘‘LDCs and Developing Countries must take a serious stand on the Cummings-Montreal resolutions on a new funding mechanism that is flexible, accessible and utilisable.’’
There are currently 46 countries on the list of LDCs which is reviewed every three years by the Committee for Development (CDP) based on the following criteria: (a) their gross national income per capita; (b) their position on the human assets index; and (c) their position on the economic and environmental vulnerability index.
The President, who was represented by the Minister of Environment Mr Mohammed Abdullahi, pledged that Nigeria would use its position as host of the headquarters of the Sahel Climate Fund to ensure that members access climate finance at fairer and reasonable conditions.
However, while accessing finance is important, the chief aims should be for the LDCs to enhance their ability to achieve structural economic and social progress, and to use the milestone of graduation from LDC status as an opportunity to find new avenues for international support to their further development efforts.
The economies of graduating LDCs, while demonstrating forms of structural economic progress, often remain little diversified and dependent on a small number of products or commodities for export.
The transformation these countries aim to achieve or pursue implies a range of structural economic changes, notably from lower to higher levels of productivity and value addition. Most graduating countries with an agenda for such progress will need post-LDC support measures, possibly new forms of special treatment after LDC status.
The context of reclassification from LDC status is an opportunity, for these countries, to step up their plea for alternative support measures after graduation, with a view to maintaining their momentum of progress.
In short, making the most of LDC benefits while these are still available, then achieving a smooth transition to post-LDC status with some alternative support measures is a broad agenda of these states, an agenda they expect UN and developed countries to help them bring to fruition.
There is also the need for strengthening of capacity, among government officials in recipient countries, to mainstream resilience-building and smooth transition strategies into national policy-making.
Of course, it is sad that global health, economic and environmental crises are becoming more frequent, and the fallout for LDCs regular and calamitous. LDCs suffer worse than most from trade, financial and commodity price volatility, cyclones, droughts and other disasters.
Clearly, not enough has been done to make LDCs more resilient or to boost their incomes. In fact, the support measures for LDCs could be much more ambitious.
A comprehensive overhaul of the system of international support needs to aim at the LDCs, many of which, in recent years, have become more vulnerable and moved even further from graduation.
On the issue of the environment, it is heartwarming to hear the President say that Nigeria has passed the Act establishing the National Council on Climate change to, among others, mainstream climate change actions in Nigeria’s economic development and ensure sustainable inclusive green growth.
‘‘Nigeria is providing leadership to the Pan African Great Green Wall that is focused on land remediation, wetlands and oases recovery, as well as developing a community resilience programme to support the Sahel region towards adaptation and mitigation of these climatic vulnerabilities,” he said. ‘‘Furthermore, the country just recently, as a member of the Sahel Region Climate Commission, volunteered and was granted the rights to host the headquarters of the Sahel Climate Fund.”
He said Nigeria intends to mobilise resources for member states, through bilateral and multilateral partners, as well as private sector financial institutions, to foster cooperation and coordinated actions among Sahel Region Climate Commission members.

On the $600 million scheme for Nigerians in technology, creative sectors

Vice President Yemi Osinbajo, this week, called on the African governments and private sector to invest more in creativity and technological innovations in the continent.
Osinbajo made his call when launched a $600 million programme for young Nigerians in the technology and creative sectors and given the critical role of science, technology and innovation in all facets of human endeavour as well as its importance to the transformation of the Nigerian economy from a resource -based to knowledge-based economy, his call can be described as an apt one.
The world is fast paced, and so also is the priority to offer timely innovations that will efficiently impact various segments of living, industry and enterprises as solutions to personal, communal and even societal needs of the people.
Nigeria has launched the $672 million fund to support technological and creative sectors for young investors who struggle to raise capital in Africa’s largest economy.
The fund, targeting 15 to 35-year-olds, comes at a time when there are concerns locally about the failure of U.S. startup-focused lender SVB Financial Group, which has supported startups in Nigeria.
Osinbajo launched the $672 million fund under the Digital and Creative Enterprises Programme (DCEP) in Abuja.
African Development Bank will put in $170 million, $116 million will come from Agence Francaise de Developpement and another $70 million from Islamic Development Bank.
The government, through Bank of Industry Nigeria, will release $45 million while the private sector pledged $271 million.
Osinbajo said that it is imperative to start a coordinated approach towards innovation on the continent through an initiative that will bring together stakeholders to coordinate efforts and build an enabling environment that supports the growth of innovation on the continent.
“DCEP is a government initiative to promote innovation and entrepreneurship in the digital tech and creative industries and especially targeted at job creation,” Osinbajo said.
Nigeria has the largest number of startups in Africa – mostly in tech and fintech – which have pulled funding from overseas banks and venture capital firms.
But most startups still struggle to attract funding because banks demand that they provide collateral, which they do not have. “The government must provide more support for startups and small businesses, and investors must provide more funding” Osinbajo said. “This is why the Investment in Digital and Creative Enterprises Programme is important.”
He, rightly, commended the development partners and promised that the programme will, indeed, support innovation across very critical pillars including policy, infrastructure, access to finance and talent.
After all, as the population soars, so also is the exploration of natural resources becoming insufficient for wealth creation and, as such, it has become imminent that Nigeria embraces measures for values addition to practices by employing science and technology with creative ideas to transform raw materials into valuable goods and services, economic development and improved quality of life.
The launch of the DICEP is, therefore, a significant milestone taken by the Nigerian government to harness the potential of youth and create more jobs.
However, for Nigeria to build a fundamental innovation paradigm that will give it incredible economic growth, it has to pump more money in research and development.
It is regrettable that research and development are still relatively low in Nigeria even as Nigeria’s current dire economic situation and foreign exchange crisis in particular provides it with an opportunity to scale up innovation.
It is only innovation that can break the Nigerian economy’s structural dependency as an import- and consumer-driven one. The investments in research and development by government and private sector players must be upped and consistent.
Thankfully, Osinbajo said that the Buhari-led administration has consistently provided support to the innovation ecosystem over the last eight years.

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