Demand 10
Climate Finance
The investment needed to accelerate Nigeria’s climate-resilient development and meet the country’s climate commitments appears more daunting than ever before.
The estimated cost of implementing the country’s Nationally Determined Contribution alone, which would lower Nigeria’s emissions by up to 47% compared to the business-as-usual scenario by 2030, is USD177 billion (approximately 82 trillion Naira).³² This cost does not consider the damage and loss induced by the growing impact of severe weather events that are becoming more frequent due to climate change. Nor does it include the cost of restructuring Nigeria’s economy away from the oil and gas sector. Estimates in various documents outline financial needs that far exceed the resources of the Federal Government of Nigeria to finance programs and projects that will address climate change.
As of 2022, Nigeria has only been able to access USD 119 million from global climate commitments.³³ Other challenges associated with accessing climate finance include the knowledge gap and the availability of a limited pool of foreign verifiers to conduct an assessment on projects, assets, and instrument eligibility.
Since the biggest contributors to emissions in the country are Agriculture, Forestry, and Other Land Use (AFOLU) (60%) and Energy (34%),³⁴ it is logical to harness local, national, or transnational funding opportunities to these two sectors as Nigeria progresses with its industrialisation by ensuring growth in its low-carbon development frameworks.
Transitioning into a green economy can unlock new economic opportunities and jobs in Nigeria and for all.
Call to Action
Set a national target of at least 1% of the nation’s GDP (N525b) to fund climate-related projects and investments such as a special intervention fund for climate finance with low interest rate and longer payment tenure.
Enhance the provision of technical support to subnational governments (States) to build the institutional capacity to access funding opportunities.
Advance the integration of climate diplomacy and foreign policy goals and engagement to attract foreign capital and grants for climate projects through national plans such as the NDCs, Energy Transition Plan, Climate Change and Gender Action Plan et al.
Promote the provision of incentives and support to local banks and commercial institutions to encourage them to provide climate financing for projects.
Adaptation finance must be consistent with Nigeria’s vulnerability to climate change, therefore the government must inject funds into financing key social and economic sectors to fill transition gaps.
Support the integration of climate finance tools in economic policies of government financial institutions especially regulators to encourage the adoption of green industries as well as the provision of insurance coverage.
Adaptation and mitigation finance must be prioritised alongside public and private sector investment scale-up for climate finance.
Improve the accessibility to climate finance for youth-led initiatives through de-risking and deregulating, including blended finance and crowding in impact investments; and through creating a separate channel for youth-led climate initiatives to access finance directly, and not solely through formal government channels.
Implementation of mandatory audits on allocated climate finance, including allocations to adaptation, mitigation, loss and damage.
Follow through with long-term strategies and sectoral pathways and commitments for adaptation and mitigation such as the Nationally Determined Contributions (NDCs), Energy Transition Plan, 2050 Long Term Vision for Nigeria, Climate Change and Gender Action Plan et al to unlock international funding for climate change.
Repurpose subsidies that sustain carbon-intensive activities into resources to support climate action while mitigating potential distributional impacts from such reforms.
National and subnational governments must shape appropriate policy reforms and investment plans to minimise the costs of mitigation and adaptation and enable public and private financing of climate action.