Unique joint sustainable banking effort in Nigeria
January 18, 2013
In September 2012, the Nigerian Central Bank issued a directive with nine sustainable banking principles’ — a set of mandatory rules which the more than 30 banks in Nigeria must follow. In this level playing field, the banking sector is given a significant role in creating and sustaining economic growth that is both environmentally responsible and socially relevant. Carey Bohjanen explains: “The principles promote environmental and social management of business activities, looking at business operations of the bank’s footprints themselves, looking at women’s economic empowerment, financial inclusion, human rights, and a number of ways to collaborate together as a sector.” They also developed three sector guidelines for each of power, oil and gas agriculture.
Not repeating mistakes
In September 2011, the formation of a ‘Strategic Sustainability Working Group’ got off to a flying start at the Nigerian Sustainable Finance Week CEO Roundtable chaired by the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi. He was immediately enthusiastic, says Carey Bohjanen who facilitated the meeting: “He said: ‘I just got off the plane from China to meet my counterpart. The message from him was: For years the banks have been ignoring environmental issues in China, do not make the same mistake because we are now paying the price.” During a year of hard work, the working group of banks tailored “sustainable banking best practices” to Nigeria’s needs. Carey Bohjanen believes more countries may follow: “The model is not so Nigeria-specific that it can’t be replicated in other countries in Africa or in South-East Asia.”
As of 26 September 2012, all Nigerian banks, ‘discount houses’ and development finance institutions in Nigeria have commenced the implementation of the Nigeria Sustainable Banking Principles. The Central Bank of Nigeria requires them to establish internal policies, procedures and frameworks to identify, assess and mitigate environmental and social risks in their lending and investment activities in the coming 12-18 months. The Central Bank is in the process of developing the structural mechanisms to support the banks in their implementation efforts, including designing incentives to drive behavioural change and encourage banks to make “meaningful contributions to the real economy”.
The interview was recorded during the Future of Banking Conference, November2012 in Amsterdam, organized by the Dutch development bank FMO.
Nigeria Sustainable Banking Principles
Sustainable Finance Advisory