The Nigerian maritime sector is a crucial driver of the country’s economy and plays a significant role in trade, employment, and revenue generation. The potential for sustainable economic development is immense with a coastline spanning over 850 kilometres and an exclusive economic zone (EEZ) extending by 200 nautical miles.

However, the absence of strategic investment has hindered the sector from reaching its full potential. Persistent financial challenges, inadequate infrastructure, high operational costs, insecurity and environmental degradation, also continue to pose major obstacles to growth.

Experts have identified blue bonds as a viable financial instrument to address these challenges, Such bonds provide the necessary capital while promoting infrastructure, environmental conservation and sustainable economic growth.

Understanding blue bond
A blue bond is an innovative financial instrument designed to raise funds from capital market investors for projects that support ocean-related activities. Such projects include maritime infrastructure, marine biodiversity conservation, sustainable fisheries, renewable ocean energy, pollution reduction, security and coastal resilience, among others, all of which aim to foster economic growth.

Modelled after green bonds, which focus on renewable energy and eco-friendly projects, blue bonds provide capital for initiatives that protect marine resources while ensuring economic viability for the maritime sector.

These bonds are issued by governments, financial institutions and private investors to finance sustainable marine projects. In 2024, the International Finance Corporation (IFC), a member of the World Bank Group, issued Vietnam’s first blue bond worth $25 million to expand funding for sustainable ocean-related activities such as aquaculture, fisheries, and water supply.

According to the IFC, millions of Vietnamese depend on the ocean for their livelihoods. By 2030, the country’s blue economy is projected to contribute about 10 per cent of its Gross Domestic Product (GDP).

Seychelles also launched the world’s first sovereign blue bond in 2018, raising $15 million to support its blue economy strategy. Similarly, Belize restructured its national debt through a blue bond, securing $364 million for marine conservation efforts.

With Nigeria’s vast coastline and maritime potential, issuing blue bonds could attract international investors, development partners, environmental groups and global financial institutions interested in sustainable maritime development.

The Federal Government, through the Ministry of Marine and Blue Economy and the Nigerian Ports Authority (NPA), has been exploring various financing options for the port modernisation programme.

However, discussions with global financial institutions on funding the rehabilitation of seaports have yet to yield results. Additionally, budget allocations to the Ministry of Marine and Blue Economy remain minimal compared to the extensive funding required for key projects in the sector.

The Dean of Faculty at City University Cambodia, Prof. Alfred Oniye, emphasised the importance of blue bonds, noting that these financial instruments, similar to green bonds, are specifically designed to fund marine-related projects. He stressed that Nigeria’s adoption of blue bonds is crucial for unlocking the full potential of its maritime economy.

Why blue bond
Blue bonds offer a strategic solution to key challenges in Nigeria’s maritime sector, addressing modern port infrastructure, shipping facilities, inland waterways, deep-sea exploration, ocean pollution, port digitalisation, environmental degradation, maritime security, and enhancing trade and logistics.

The Nigerian Trawler Operators Association (NITOA) has reported that Nigeria loses over $70 million yearly to illegal, unreported, and unregulated (IUU) fishing.

Investments from blue bonds could enhance surveillance, support naval operations, and fund capacity-building programs for maritime security personnel, helping to combat piracy and maritime crime, major threats in the Gulf of Guinea.

The House of Representatives Committee on Maritime Safety, Education, and Administration had previously called for alternative funding sources to sustain the Deep Blue Project.

The committee criticised the sole funding of the project by the Nigerian Maritime Administration and Safety Agency (NIMASA), arguing that with serious investment, issues such as maritime insecurity in the Niger Delta could be significantly reduced.

While Nigeria’s coastal and marine tourism sector remains underdeveloped, it holds significant economic potential. Financing from blue bonds could improve marine ecotourism, enhance coastal infrastructure, and create sustainable jobs.

Oniye emphasised the importance of blue bonds for Nigeria, citing their role in environmental protection, sustainable development, economic growth and climate change mitigation.

He explained that blue bonds fund initiatives such as sustainable fisheries, marine conservation, and pollution control, critical for preserving Nigeria’s coastal and marine ecosystems.

He also highlighted that the blue economy’s key sectors, including fishing, tourism, and renewable energy, could create jobs, boost income and drive economic development.

Furthermore, projects funded by blue bonds could help mitigate climate change impacts through coastal protection measures, marine ecosystem restoration, and other initiatives that reduce vulnerability to climate-related risks and enhance resilience.

Oniye stressed that by investing in blue bonds, Nigeria could promote sustainable development while ensuring its maritime resources’ long-term health and productivity, aligning with global sustainability goals and securing a better future for generations to come.

Adoption challenges
Despite its benefits in attracting investment and boosting infrastructure development, adopting blue bonds in Nigeria’s maritime sector faces several challenges that could hinder successful implementation.

Key obstacles include weak institutional and regulatory frameworks, investor confidence and creditworthiness, lack of transparency, political and policy instability, environmental and sustainability risks, high cost of capital and currency risks and a lack of awareness and expertise.

Nigeria’s maritime sector has historically struggled with weak regulation enforcement, corruption, and bureaucratic inefficiencies, which could discourage investors.

Also, financial mismanagement or instability concerns could make it difficult to secure buyers for blue bonds. Nigeria’s credit rating, debt burden, and economic stability will influence investor interest. Investors may hesitate to commit if government priorities shift, raising doubts about the sustainability of blue economy initiatives across administrations.

Raising funds through blue bonds often involves borrowing from international markets, exposing Nigeria to currency risks. A significant naira depreciation could make foreign-denominated bond repayments more expensive, increasing the financial burden on the government.

Unlike green bonds, which have gained traction, blue bonds are relatively new in developing economies like Nigeria.A lack of expertise in structuring and managing such bonds could lead to poor project execution and misallocating funds.

Additionally, raising capital through blue bonds could be expensive, while ensuring that funded projects meet environmental and sustainability standards remains a challenge.

Experts suggest several measures to facilitate blue bond adoption in Nigeria, including, strengthening regulatory frameworks to improve governance and investor confidence, ensuring transparency and accountability in fund utilisation and adopting clear sustainability guidelines to meet international environmental standards.

Others are establishing clear government policies and incentives to encourage blue bond issuance, implementing strong monitoring frameworks to ensure effective fund usage and educating investors on the long-term economic benefits of sustainable maritime investments.

The Founder of the Blue Economy Academy, Ubong Essien, emphasised the importance of promoting blue bonds to drive maritime sector growth. He suggested that coastal states should allocate at least N50 million from their budgets to blue bond projects but expressed concerns about potential mismanagement by state governments.

The Former President of the Shippers Association of Lagos State (SALS), Jonathan Nicol, echoed similar concerns, questioning whether funds raised through blue bonds would be effectively utilised, citing the longstanding issue of mismanaged seven per cent port development funds for the past 20 years.

“The shippers’ contribution has been constant. They shared the money among some MDAs. Is that what was intended to be?” he asked. Despite these concerns, industry experts agree that with proper oversight and governance, blue bonds could become a transformative financial tool for Nigeria’s maritime sector, fostering economic growth, environmental sustainability, and long-term resilience.

Path to sustainability
A well-defined regulatory framework must be established for Blue Bonds to succeed in Nigeria. The Federal Ministry of Marine and Blue Economy, in collaboration with the Nigerian Maritime Administration and Safety Agency (NIMASA), must develop policies that encourage investment in sustainable marine projects.

Transparency and accountability in fund allocation will build investor confidence and ensure long-term success. Oniye emphasised the need for Nigeria to identify eligible projects that can be funded through blue bonds. He said these may include sustainable fisheries, marine conservation, pollution control and other relevant initiatives that align with global sustainability standards.

He also stressed the importance of developing a comprehensive bond framework, which should outline the use of proceeds for eligible projects, and the evaluation and selection process to ensure funds are allocated effectively.

Others are proceeds management to track fund utilisation, and regular reporting on allocation and impact to maintain transparency and accountability.
Oniye further highlighted the importance of obtaining a Second Party Opinion (SPO) to verify that the bond framework meets industry standards. He said disclosing this assessment to potential investors enhances the credibility and attractiveness of blue bonds.

Additionally, he stressed the need for transparent and effective management of proceeds, with yearly reporting on project allocations and expected impacts.
Such measures, he said, would build trust among investors and key stakeholders, including government agencies, financial institutions and environmental organisations.Oniye said their active involvement is crucial to ensuring the successful issuance and management of blue bonds.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, called for the introduction of blue bonds to support investments in ocean resources, maritime infrastructure, and sustainable economic activities. He described blue bonds as a strategic approach to raising funds without overburdening importers and exporters with excessive taxation.

“The more financing opportunities we create for maritime and port infrastructure, the better. This is a good idea because we have significant assets within the blue economy that can attract investment,” Yusuf explained.

However, he emphasised the importance of efficient management to ensure the bond’s success. “If you are issuing a bond, investors expect returns with interest. That means the sector must be managed in a way that guarantees repayment and profitability. Without top-notch management, it could become unsustainable,” he warned.

Yusuf also argued that investing in maritime infrastructure, including ports, shipping, and ocean energy, could position Nigeria as a key player in the global maritime industry.

He stressed that the initiative could provide much-needed funding for port expansion, coastal protection, and other maritime projects, reducing financial strain on the government while attracting private-sector participation.

“The successful adoption of blue bonds in Nigeria hinges on strong governance, transparency, and effective fund management. With the right policies in place, blue bonds could unlock massive investment opportunities, enhance maritime infrastructure, and drive sustainable economic growth, ensuring that Nigeria fully capitalizes on its vast blue economy potential,” he stated.