Nigeria to curb environmental degradation through bank loans

Sanusi Lamdo Sanusi, CBN Governor

Nigeria to curb environmental degradation through bank loans
Acheme Jack, Lagos

The Central Bank of Nigeria CBN, said it was planning to introduce new lending standards for banks.

It explained the new standard is aimed at preventing loans to businesses that destroy the ecosystem, especially oil companies, which are not meeting environmental standards.

Encouraging environmentally responsible lending

The Central Bank Governor, Lamido Sanusi at the end of the maiden edition of a three day conference on sustainable finance in Lagos south west Nigeria, said that the standards would encourage environmentally responsible lending.

“We are going to get the banks to agree on what common standards they are going to apply for lending to counterpart parties. All companies will have to know that if they want to borrow from Nigerian banks, there are certain standards they have got to comply with. And we, as regulators will work with our government to see that we even deal with international banks that are going to lend their money to investors in Nigeria”, Lamido said.

“At the end of the day the principle is that Nigerian banks have a balance sheet that is taken from savings of Nigerians and that money should not be used to finance business that lead to the degeneration of the environment’’, he added.
Lack of sustainable financing

Sanusi equally blamed the restiveness in the oil bearing communities in the Niger Delta area, as well as the on-going Boko Haram crisis in Nigeria on lack of sustainable financing which has made farming and fishing, a main employer of labour, difficult in some regions across that country.

“Look at what happened in the Niger delta, somebody in the area cannot cast a net in the river and catch fish, and that is a fisherman and not an employee of an oil company. Now he has to find money to buy imported fish even though he has river where he is supposed to fish in”.

Campaign for environmental safety

A consortium of Nigerian banks supported by the Chartered Institute of Bankers of Nigeria, CIBN, and led by Access Bank plc have been in the vanguard of sustainable financing campaign for the environment, especially in the area of green economy, that promotes low carbon emission for environmental safety due to the on-going effects of climate change.

The Group Managing Director and Chief Executive Officer of Access Bank, Aigboje Aig-Imoukhuede said he agreed with Sanusi on the effects of poor funding of environment by companies.

“To finance a factory requires money or loan obtained from the bank, it is noted that you may have damaged the ecological value of the environment where that factory is located. In the process you may have created a platform where child slavery or very poor labour practices take place or you have created a process where somebody takes money from shareholders and poorly administers and then take off”, Aig-Imoukhuede stated.

“You begin to realize that as lender, that you need policies that will ensure that those who utilize the capital that flows within our environment, utilize it not just to make profit, but also  in a way that add value to the environment within which they operate as enshrined in the equator principle practiced by advanced countries”, he added.

Sustaining environmental financing

Local and international environmentalists led by the Nigerian Conservation Foundation, international financiers such as, the United Nations Environment programme Finance Innitiative, UNEPFI, the International Finance Corporation, IFC, and the African Development Bank group, AFDB, were also involved in the on-giong environmental financing sustainability initiative in Nigeria.

The Chief Executive officer of Entrepreneurial Development Bank FMO from the Netherlands, Mr Nanno Kleiterp added that development in Nigeria will be increased through the initiative.

“The issue of sustainability is very important and the commitment of the Nigeria’s banking sector is appreciated. The international lending principle which has to be adopted for Nigerian circumstances and those principles that are activities to be financed, are not in detriment to the environment and are in favour of social development”, Kleiterp said.

A time line was not given by the stakeholders on when the guideline on the initiative will be adopted and made public, but analysts believed that the development will protect both the people and the environment and above all the bankers because there will be guarantee on investment in the presence of peace.

Shakira