The Association of African Development Financing Institutions in Africa (AADFI) and the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) have identified how companies in developing countries including Nigeria can tap into the $100 billion annual climate fund to tackle climate change challenges.
This was revealed at a recent forum in Abuja, hosted by the Bank of Industry (BoI) and the African Development Bank (AfDB).
The event themed, ‘Strategic Role Towards a Climate-smart Future’, had about 300 delegates and 30 speakers from across Africa and the Asia Pacific.
Doris Uzoka-Anite, Nigeria’s minister of Trade and Investment who was represented by Mimi Abu, director of Human Resources, advocated for global actions to promote a climate-smart future, emphasising the role of Development Financial Institutions (DFIs) in mobilising private investment to tackle climate challenges.
Uzoka-Anite, charged participants that if DFIs failed to create solutions for climate change mitigation and adaptation where agriculture and inadequate infrastructure prevail, it would further worsen the challenge of climate change.
She said through innovation, DFIs can boost agriculture productivity and reduce hunger, while she advocated the expansion of actionable plans to incorporate climate-resilient products and measurable targets into African business models as part of solutions to address climate finance needs and derisk sustainable investments in the region.
The minister said the decision made by DFIs at the conference will change the economy, lead to prosperity and improve the livelihoods of the people.
According to AfDB, Africa needs to spend $250 billion yearly to meet its climate finance needs.
Climate spending and economic growth have converged in recent years, with the World Bank arguing that every dollar spent on climate adaptation has a multiplier effect of $4 in economic benefits.
“Sadly, Africa only receives 12 percent of the $250 billion yearly funding needed even as a paltry two percent of the amount is available for spending. To address the huge funding gap, developed countries committed to a collective goal of mobilising $100 billion per year by 2020 for climate action in developing countries, including Africa, at the 15th Conference of Parties in Copenhagen in 2009,” the statement.
It said the goal was formalised at COP16 in Cancun and COP21 in Paris, it was reiterated and extended to 2025.
BoI also announced that it secured a credit line of €100 million from the French Development Agency (AFD) for the expansion of green finance in Nigeria.
Olasupo Olusi, managing director and chief executive officer of BOI hinted that the bank has worked with its partners to raise over $5 billion from several International Financial Institutions in the last five years for building a climate-smart Nigeria in line with President Bola Tinubu’s vision
“As Nigeria’s leading DFI, one of the primary drivers of BOI’s developmental strategy is to accelerate the country’s development through supporting environmental-friendly and sustainable projects across the key sectors of the economy, we at BoI are committed to promoting this strategy to deliver on our mandate,” he said.
The AADFI-ADFIAP Joint International CEO Forum also launched The Association of African Development Financing Institutions in Africa Working Group on Climate Change.
The group will identify funding opportunities for green projects and collaborate with the African Financial Alliance on Climate Change (AFAC) to support member institutions in addressing climate change challenges.
It noted that they will also focus on creating a roadmap for climate change in Africa as well as supporting climate change solutions.
“The action would ensure there is a dedicated team to tackle research issues and address associated issues from time to time,” it said.
Michael Ma’hmoud, economist and development management expert spoke on the importance of sustainable capital.
He noted that historically, DFIs were supervised and regulated the same way as commercial banks, leading to the failure of several DFIs in francophone countries.
He further emphasised that sustainability is a critical factor in strengthening DFIs and mobilising resources to address developmental challenges.
Zeph Nhleko, chief economist at Development Bank of Southern Africa, said DFIs play a crucial role in climate financing, but there is a need to adopt innovative models to attract more capital.