Climate Financing in Nigeria: Who Pays for Our Climate?

Climate Financing in Nigeria: Who Pays for Our Climate?

Saturday, August 26, 2017 10:04 pm

Chikwendu Chizurum Henry

By Chikwendu Chizurum Henry

Nigeria, the most populous black nation in the world has been classified as a developing nation (lower-middle incomes) according to World Bank 2016 Report.The country has a robust population growth with the attendant need for massive infrastructural development in the key sectors.

However, Nigeria is experiencing huge infrastructural loss in areas such as power – energy, healthcare, transport, housing, roads, and other social amenities that make life comfortable, and these have contributed in slowing the growth and development of Nigeria’s economy.

It is a well-known fact that climate change presents a lot of challenges which affect the entire world in no small measure. The consequences of this ugly monster with its far-reaching effects have been felt by both the developed and developing nations, in particular, making their lives and population vulnerable.

Nigeria is battling with the difficult task of achieving stable economic development in the face of a great infrastructural deficit, alarming growing population, and inadequate financial resources to tackle her immediate needs.

Now, climate finance refers to the arrays of financial flows in terms of activities and projects which aim at achieving progress towards climate objectives. In fact, climate finance has been seen as a measure to respond to the threats posed by climate change to developing countries.

These objectives usually focus on either Mitigation – to limit or reduce the emission of GHGs to the atmosphere and Adaptation – to assist communities and economies adapt to negative impacts of climate change.

As the nation plans to significantly bring down GHG emissions to at least 20% by the end of 2030, and increase target to about 45% based on support from the international donor agencies; it is however faced with the problem of who will take the responsibility of climate finance as it moves towards implementing green bond.

Climate finance comes from various sources both from private or public coffers and flows internationally as well as domestically. Recognizing the fact that most developed nations have contributed to climate change more than other nations, many developed nations have taken it upon themselves to provide financial assistance to developing nations to meet their climate change objectives.

So, developed countries have made a commitment with the aim of raising jointly 100 billion USD a year by 2020 to tackle climate needs of developing nations.

Currently, Nigeria has leveraged 63 million USD of multilateral funds for climate change projects according to Overseas Development Institute. This is less than what Nigeria needs to strengthen its fight against climate change considering Nigeria’s level of GHG emissions, its vulnerability to the effects of climate change, as well as a number of funds leveraged to developing countries as a whole.

Nigeria requires about 140 billion USD to tackle climate change and the measures for adaptation to climate change already incorporated into climate systems could cost between 0.7 and 1.2 billion USD per year for the next 40 years. The costs of tackling climate change in Nigeria will be important as the impact of climate change could increase poverty to about 100 million persons in 2030 according to World Bank.

However, Nigeria has taken the bull by the horn in the midst of these challenges by deciding to look inwards. By opting to the Paris Agreement, Nigeria has accepted and commenced the issuance of the green bond (as at July 19, 2017) as an alternative and innovative channel of raising climate finance.

This shows that Nigeria has officially keyed in and commenced participation in the Climate Finance Accelerator (CFA) Initiative, which is the action plan articulated by the Nigerian government to implement its obligations on climate change. So, this initiative is an innovative approach targeted at fast tracking the funding of the country’s Nationally Determined Contributions (NDCs).

The objective of this initiative is to articulate initial financial solutions for the most important climate change projects and figure out the larger measures, including financial and human resources required to bring the projects into reality. The CFA initiative will host a five-day professional workshop in London precisely in September 2017, which will converge Nigeria, Vietnam, Mexico, and Colombia together in association with green finance professionals to articulate descriptions for implementing NDC financing decisions.

In the midst of this positive development, the issuance of green bonds will serve as a boost to the country’s economic deficit in terms of infrastructural development and builds its reputation for commitment to the green environment and enhances its chance of attracting climate finance from both local and international partners.

Now, making the right choices as regard climate resilient infrastructure which locks in low carbon development is of a necessity and quick. So, the government must concentrate more on strengthening and enforcing reforms in the sector as this will improve investment into the environment which will act as a catalyst to financing the nation’s infrastructural deficits.

Therefore, access to funds has become imperative to climate finance for facilitating green development, reducing GHG emissions, and the effects of climate change in our society. So, climate finance provides the best avenue for Nigeria to increase the flow of climate funds in both short and medium term, giving her the needed edge to fight climate change holistically.

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