Financial Sector Deepening Africa (FSD) , a specialist development agency working to build Africa’s financial markets for sustainable development, is looking to Nigeria’s $40 billion investible funds to scale up impact.
Established in 2012 and supported by UK aid, FSD Africa, through its capital market arm, is engaging fund managers, institutional investors and government agencies in Nigeria to drive large-scale change in financial markets and support sustainable economic development.
“We develop Africa’s capital markets to increase the availability of long-term finance for economic development, to achieve a sustainable future for Africa’s people,” said Evans Osano, director, Capital Market at FSD Africa.
Osano gave the hint at the FSD Africa Capital Market Roundtable Series: Nigeria 2023 held in Lagos on Wednesday with the theme ‘Mobilising Patient Capital Via Innovative Financing Structures For Sustainable Development in Nigeria’.
Encouraging fund managers and partners to deepen participation, Osano said the country’s over $40 billion investible assets should be explored in developing the green economy as opportunities abound in infrastructure, housing, water, and power, among others.
He said environmentally friendly growth can improve access to food, services, create green jobs and boost incomes in new and existing sectors of the economy.
Osana said the transition towards carbon-neutrality and environmental sustainability will reduce the negative impacts of climate change among poor communities.
He urged fund managers to move away from traditional transitions to impact investments that will guarantee sustainable development for Nigeria.
He said: “The traditional mindset is to say, I want returns for the level of risk I am taking and that is very simple and laid back, but given that we are operating in a context, an environment, we need to start thinking about how we can generate those returns and still contributing to solving the society’s problems.”
“How can I invest money that can also create jobs? That is impact investing. And impact is at the far end of the scale and we can start that journey. That is really what I am challenging the Nigerian institutions and investors to start thinking about.”
According to him, there is no point in getting a very high return and then one retires into an environment where if one falls sick, there is no access to medical care.
Oguche Agudah, chief executive officer of Pension Fund Operators Association of Nigeria, said: “What we need to do is to look at challenges facing us as a country in different ways and use the capital that we manage to tackle them in an innovative way.
“What needs to happen is for capital to be deployed in a manner that seeks to solve some of these challenges and for that capital to be deployed adequately in a way that compensates the capital providers for their risk, compensates them for their time, and also compensates the people who manage those funds. In this way, they will be incentivised to do it again and again and again.
“We need new sustainable models. We need new products, we need new mindsets, because the problems that are ahead of us are new. We also need to work together more closely in order to ensure that we have the society that we all crave for and that Nigeria can indeed be a beacon of hope to the rest of Africa.”
FSD Africa is currently implementing its initiative in over 60 projects in 33 countries across Africa including Ethiopia, Ghana, Kenya, Morocco, Nigeria, Rwanda, Tanzania, UEMOA, Uganda, Zambia, and Zimbabwe.
In Nigeria, FSD Africa Capital Market has initiated projects like the first African green bond, first certified corporate green bond in Africa, FMDQ – green bonds, and Infracredit Nigeria – guarantee and preparation facility (NSIA).
Mark Napier, CEO of FSD Africa, said the focus of his engagement with key actors in the Nigerian financial market is to significantly boost the role of the private sector in climate finance.
Napier said efforts are ongoing to enhance regulatory reforms, structural changes, and leverage financing.
