Mobilizing Private Sector Investments For Nigeria's Climate & Green Growth Goals

The path to achieving Nigeria's climate change and green growth goals hinges on robust private sector investments. The African Development Bank (AfDB), in its "Nigeria Country Focus Report (CFR) 2023," emphasizes the critical need for mobilizing private climate finance to meet the country’s 2030 nationally determined contribution (NDC) targets.

The Investment Gap

Nigeria requires an annual investment of $20.5 billion in renewable energy, sustainable transport, and waste management. The public sector alone lacks the necessary resources to address the climate crisis and facilitate a transition to sustainable growth. Nigeria’s climate financing needs from 2020 to 2030 are estimated at $247.3 billion, with mitigation activities comprising the largest share at $177 billion.

The Role of the Private Sector

Currently, private sector participation in Nigeria’s climate finance stands at 22.1%, which, although higher than the African average, is still insufficient given the size of Nigeria’s economy. To close the financing gap, a significant increase in private sector contributions is essential:

- A 25% contribution would require an annual growth rate of 26%.

- A 50% contribution would necessitate a 33% growth rate.

- Fully closing the gap would require a 42% annual growth rate in private sector financing.

If properly incentivized, Nigeria’s large private sector, including non-financial corporations, financial institutions, and SMEs, could significantly bridge the climate financing gap.

Urgent Need for Low-Emission Development

With greenhouse gas (GHG) emissions rising continually since 2009—Nigeria ranks third highest in Africa for emissions—the country’s growth must follow a low-emissions pathway to prevent carbon lock-in. This is particularly important as Nigeria undergoes further industrialization and urbanization. The nation is also highly vulnerable to climate change impacts, given its dependence on ecosystems and natural resources.

Current Climate Finance Landscape

Nigeria invested an average of $1.9 billion per year in climate-related activities, just 11% of the $17.7 billion needed annually to meet its NDC target of reducing emissions by 47% below business-as-usual by 2030. Fossil-fuel financing continues to dominate, with Nigeria ranking second in Africa for the number of fossil-fuel projects financed between 2016 and 2021.

Recommendations for Enhancing Climate Finance

1. Invest in Climate-Resilient Infrastructure: Leverage public-private partnerships to address the growing infrastructure finance gap, ensuring development is climate-resilient.

2. Strategic Use of Public Finance: Mobilize private finance at scale and invest in underfunded sectors, particularly Industrial Processes & Product Use and Waste.

3. Scale Up Solar Technologies: Increase investment in on/off-grid solar technologies to achieve energy access and NDC climate goals.

4. Focus on solutions: Deploy public climate finance in integrated solutions, such as nature-based initiatives or actions that address both air quality and climate, maximizing the impact of limited resources.

EKO Carbon and Commodity Exchange's Role

At EKO Carbon and Commodity Exchange, we are committed to facilitating this crucial transition. We assist companies in offsetting their carbon emissions, providing a vital tool for businesses to contribute to Nigeria’s net zero ambitions. By engaging with us, companies can not only mitigate their environmental impact but also play a pivotal role in driving the country’s sustainable development.

Together, we can mobilize the necessary investments and achieve a greener, more resilient future for Nigeria.

#ClimateFinance #Sustainability #NetZero #GreenGrowth #CarbonOffset #NigeriaClimateAction