*Lagos ranks first sub-national to issue a green bond in Africa
By Olawale Lamina
The Lagos State government Thursday finalized the issuance of two bonds amounting to about N244.82 billion, which it plans to deploy its net proceeds towards scaling up infrastructural developments across priority areas of transportation, education, healthcare and food security.
The combined issuance included first green bond to be issued by an African sub-national, the N14.815 billion 5-Year 16.00 per cent Fixed Rate Series 3 Green Bond 2030 and the N230 billion 10-Year 16.25 per cent Series 4 Conventional Bond 2035. Both were issued under the Lagos State N1 trillion Debt and Hybrid Instruments Issuance Programme.
During the joint signing ceremony yesterday at the Federal Palace Hotel, Victoria Island, Lagos, Lagos State Government and its professional advisers signed off the transaction documents for the two offers, placing the state on three milestones of being the first sub-national to issue a green bond in Africa, the largest sub-national bond issuer in Nigeria and a new personal record of largest single issuance by the state.
Speaking on the milestone, Lagos State Governor, Mr. Babajide Sanwo-Olu stated that the commutative proceeds from the bonds would be used to expand critical infrastructure in key sectors such as transportation, housing, environmental sustainability, healthcare, and education, in an effort to achieve sustainable and inclusive growth.
The breakdown of utilisation indicated that the proceeds would be used for expansion of highways to ease mobility across the state, construction and rehabilitation of roads aimed at boosting productivity and development of affordable housing schemes to meet the needs of growing population.
He added that the funds would also be used to upgrade healthcare facilities, including the development of a new 280-bed hospital, install alternative solar power systems across schools and establish agro-processing hubs to strengthen food security.
The governor stressed that the impressive oversubscription to the two bonds underscored investors’ confidence in the governance and economy of Lagos state.
Sanwo-Olu emphasized that since the inception of his administration, the state has been setting new records in bond issuance, with the first bond issued in 2020, valued at some N110 billion setting a record at the time and subsequent bond surpassing its predecessor.
“Lagos State has now issued the first-ever sub national green bond in Nigeria, raising N14.815 billion. At the close of the book build, we received total bids of N29.29 billion, with N27.79 billion within the advised price guidance. This overwhelming response is a strong endorsement of Lagos State’s vision for environmental responsibility—aligned with the second pillar of our THEMES+ Agenda—and our long-term strategy to build a Lagos that is prosperous, resilient, and environmentally secure for future generations.
“Similarly, our Series 4 Conventional Bond targeted N200 billion. However, at the close of book build, we received bids totaling N310.06 billion, of which N304 billion were within the advised range. Given this extraordinary investor confidence, we exercised the green shoe option and successfully raised N230 billion.
“This is now the largest bond issuance ever by Lagos State—and indeed by any sub national government in Nigeria. It is a resounding vote of confidence in the vision, governance, and fiscal discipline of Lagos State. This trust is precious, and we do not take it for granted.
“In total, Lagos State received N338 billion in bids across the Series 3 Green Bond and Series 4 Conventional Bond,” the governor Sanwo-Olu stated.
The state chief executive said that the issuances serve an evidence of the vision, governance, and fiscal discipline that are hallmarks of the state administration.
Also, the Lagos State Commissioner for Finance, Mr. Abayomi Oluyomi said the maiden green bond issuance is a reflection of the state unshaken commitment to climate-friendly development, infrastructure sustainability, and environmental resilience.
According to him, the rigorous project selection process embarked upon for the green bond underlined the state’s dedication to financing projects in tandem align with the United Nations Sustainable Development Goals (SDGs) and deliver measurable environmental impact.
He equally pointed out that the Lagos state had obtained a credible second-party opinion on the green bond, noting that the bond fully met global green bond standards, having been certified by the internationally recognised Climate Bonds Initiative.
The Commissioner for Finance said that while regulatory thresholds limited the final size of the conventional bond issuance, the state now has a prospective higher target of N300 billion to N500 billion, given robust market participation.
Oluyomi emphasized that: “These successes reflect both the commitment of Lagos State to responsibly access and utilise the domestic capital market, and the sustained confidence investors continue to show in our economy.
“With a benchmark now approaching N300 billion and potentially reaching N500 billion in the future, we are optimistic that upcoming issuances will continue to attract robust market interest.”
In his remark, the Chief Executive Officer, Chapel Hill Denham, the lead issuer, Mr. Bolaji Balogun, note that Lagos state has continued to stand as a beacon of best practices and innovation, even as many states in Nigeria face challenges in issuing bonds due to transparency and compliance challenges.
“I believe strongly that the world is becoming increasingly African, and Lagos—this remarkable city-state—stands firmly at the center of that shift. Lagos can only continue to lead by leveraging the public markets in a substantial and strategic manner. Many years ago, Lagos set a record as the first state to issue in the public markets, and through successive administrations, that continuity of governance has remained one of the reasons the markets continue to support the state.
“This N230 billion issuance is not only the largest ever by a sub-national entity in Nigeria, but also the largest by any issuer in this market aside from the sovereign. To become the first sub-national in Africa to issue a green bond is no small feat,” stated Mr. Balogun
Similarly, representative of the Deputy High Commissioner and Nigeria Finance & Investment Mobilisation Lead, British High Commission, UK Foreign Commonwealth Development Office, Temilola Akinrinade, remarked that the issuance was as a result of a long-term partnership between Lagos State and the United Kingdom (UK) Government, which included support in developing a green bond framework.
She noted that the Lagos issuance came at a crucial time with countries seeking long-term climate-competitive financing, adding that the significant oversubscription of the bond issuance showed that Lagos State can effectively access capital markets, attract strong demand, and set a good example for other regions, while creating opportunities for climate-resilient growth.
Akinrinade said: “This strong investor response demonstrates clear confidence in Lagos State’s strategic direction, governance, and financial discipline. It also reflects the growing strength of Nigeria’s economic reforms led by His Excellency, the President of the Federal Republic of Nigeria, which are opening new opportunities for sustainable growth.”
She particularly stressed that UK was proud of its enduring partnership with Lagos State and Nigeria, which aimed at driving mutual prosperity.
“Just one year ago, our Foreign Secretary signed the new UK–Nigeria Strategic Partnership, which continues to strengthen our shared growth ambitions through the UK–Nigeria Enhanced Investment and Trade Partnership. A major pillar of this partnership is mobilising financial investment to support economic opportunities in both countries,” Akinrinade said.
About The Author
