By Samson Echenim
Nigeria can actually leverage on local and international sources of fund to achieve its nationally determined contribution (NDC) goals in the Parish Agreement targets by 2030 via bonds, guarantee instruments, commercial debt, concessional loans, equity and insurance products, global climate impact finance adviser, Jubril Adeojo has said.
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Nigeria signed the Paris Agreement in 2015 committing to achieve its NDC targets by 2030 towards combating climate change. Since the Paris Agreement and the NDC targets went into effect in 2015, the primary factor constraining the country’s NDC implementation has been lack of access to funding from the public and private sectors.
Adeojo, managing director, SMEFUNDS Capital Limited, said without a constant flow of funds locally, and from the international markets, it would be very difficult for Nigeria to achieve its NDC targets by 2030.
«The required funding flow to enable Nigeria achieve its NDC targets by 2030 is available locally and from the international markets via bonds, guarantee instruments, commercial debt, concessional loans, equity and insurance products. What is required is for both financial actors and non-financial actors to understand the commercial viability and sustainability for their enterprises, and the positive social impact on the larger society, in conducting their usual investment and operating activities and decisions in a climate-resilient and impact manner,» said Adeojo who holds a PhD in climate impact financing and a senior fellow, Trans4m Centre for Integral Development.
According to Adeojo, most actors in the Nigerian financial system from multi-lateral development financial institutions, to commercial banks, investment banks, pension fund managers, insurance companies, and private equity firms, appear to think that climate financing entails a new round of education, which is not so.
He said, «Let me simply explain that climate finance does not mean that the bankers and financial operators should alter their subsisting financing forms such as project finance, corporate finance, bonds, insurance products, guarantee instruments. To truly engage in climate finance is just a change of mind-set and consciousness in the kind of underlying assets and transactions that they provide funding for.
«Climate finance is not requesting the financial actors to relax due diligence criteria in order to provide funding for bankable climate impact and resilient transactions and projects’.
Just to cite few scenarios where financial actors can easily engage in climate finance. Starting with Agriculture.
«It includes financing agriculture projects in the light of climate finance entails providing funding for sustainable or climate smart agriculture projects or businesses such as Greenhouse farming – food production with very little or zero use of soil without the use of fossil fuel powered heavy duty equipment like tractors and combine harvesters; solar irrigation farming that is not reliant on natural course of rainfall that has become unfavourable.
«In the industries sector, financial actors should encourage (and be willing to provide the required funding to implement) the manufacturers to adopt the use of clean energy such as gas, or renewable energy to powered their factories via a captive power as a service arrangement with an experienced clean energy provider to avoid high acquisition cost, instead of providing funding for the acquisition of fossil fuel powered generators that emit carbon dioxide.
«Industries should also be encouraged to engage in comprehensive energy audit at the point of major assets replacement in order to factor in energy efficiency measures that will drop the energy demand of the factory, which in return reduces the energy generation capacity that is required to power the factory, which also translates to significant reduction in operating overheads.»