By Ruth During
Over time, man has altered natureâ€™s ability to maintain earthâ€™s climate through industrialisation, and over exploration of natural resources. As this continues, the need has arisen for mitigation in order to restore the earth to its original state of clemency. However, this will not be possible without a cost or price, which is described or called climate finance. Climate finance refers to the funding of activities and projects which aim to achieve progress against climate objectives such as mitigation and adaptation. This finance can come from both private and public sources and can flow either domestically or internationally.
Last year at the 16th Conference of the Parties (COP) to the UNFCCC, developed countries committed to mobilise USD100 billion per year by 2020 for climate finance for developing countries in the context of meaningful mitigation action and transparency on implementation. This commitment was reiterated in Decision 1/CP.21 (hereafter referred to as the Paris Decision), which indicates that funding will continue at this level until 2025, by which time a new target figure will be set (OECD: Paper No. 2016(3). According to current estimates, the negative effects of climate change are already reducing Africaâ€™s GDP by about 1.4 per cent, and the costs arising from adaptation to climate change are set to reach an annual three per cent of GDP by 2030(ACCF 2017)
Nigeria is faced with the onerous task of stable economic development in pace with its growing population and with huge infrastructure gaps and inadequate finance. It is highly recognised that climate change presents one of the greatest challenges of the world and Nigeriaâ€™s huge infrastructure deficit in power, housing, roads, healthcare, port services, among others, have contributed to a large extent in retarding the growth and development of her economy.
According to what Nigeria committed to the Paris agreement, the country has embraced the issuance of green bonds as an innovative means and alternative way of raising and supporting climate finance. This was confirmed last week when the Federal Ministry of Environment in collaboration with the Federal Ministry of Finance officially launched Nigeriaâ€™s participation in the climate finance accelerator (CFA) initiative. This is an action plan prepared by Nigeria to implement its commitment under the Paris agreement on climate change. The aim here is for Nigeria to develop initial financing propositions for priority climate change projects, as well as identify the broader measures and human and financial resources required to make the projects happen. After identifying the priority project, the benefits will go beyond climate change into sustainable economic development, including clean energy generation, energy and water security, economic resilience which is in line with the governmentâ€™s economic growth and recovery plan (EGRP).
Thus, Nigeria needs to seek an alternative to finance its climate. That is, all three tiers of government need to meet and strategise ways to secure funds domestically from both public and private sources combined with funds provided by the government. Another strategy to secure climate funds locally is to createÂ an awareness to the public on the shortage of climate funds from the international climate finance and its implication on the nation, hence sensitising the public (illiterate and literate) in various languages about the consequences of their actions on the climate. For example, the flooding we are experiencing now is partly due to the fact that a lot of people have built houses on waterways, blocking them and causing disaster. Last month for instance, inadequate drainage networks, in Lagos and Niger States in Nigeria contributed to heavy flooding that destroyed lives and property. In Sierra Leone, flooding and mudslide, which are as a result of illegal human settlement and the aforementioned inadequate drainage systems, killed over 600 persons. Therefore, sensitising the public will go a long way in keeping sub-Sahara Africa alive.
Â Also, the government has to be transparent on how donated climate funds are spent and should get the public fully informed. This will help Nigeria not to totally depend on international financing but to see it as support to achieving the climate objective. This will be a great contribution by Nigeria to international financing in combating the threat to our environment due to climate change. The country also planned to reduce emission by 20% by the year 2030, with the intention of raising the target to 45%, with the support of the international community
Adams Smith international also recorded that Nigeria has leveraged $63m of multilateral funds for climate change projects (Overseas Development Institute 2015). In the midst of the current uncertainties in the Nigerian economy and the countryâ€™s journey towards vision 2020, it is noble to say that the issuance of green bonds by various levels of the Nigerian government or corporate entities will serve as a boost of the countryâ€™s economic deficit for infrastructural development and enhance its reputation for commitment to the environment thereby making it attractive for both local and international finances.
Meanwhile, the government is also focusing strongly on institutional policy changes and sector reforms because this is essential towards improving the investment in finance capable of attracting private investors at the level that can meaningfully aim at financing the nationâ€™s infrastructure deficit. This is because such bonds will only be attractive to investors if the underlying projects are viable, properly developed and satisfy the bankability test.Â (NIAF vol.8, 2015).
In the last few years, important advances have been made by Nigeria to contribute to and support climate finance such as, the Clean Technology Fund, which is supporting the development of transformative public transport schemes in Lagos, Kano and Abuja and the Department of Climate Change has also established a pioneering Climate Finance Unit that would enhance knowledge and information on climate finance opportunities and help develop robust project proposals. Furthermore, in 2016, a major effort commenced to better coordinate Nigeriaâ€™s climate change response and climate finance prioritisation, and a strategy for accessing resources from the Green Climate Fund was also developed.
While much remains to be done, the direction of travel is clear: Nigeria is taking an increasingly pro-active and engaged approach to access climate finance resources, and developing the coordinated response that this needs.
â€“ During writes from AbujaÂ Â Â Â Â