Nigeria taps banks, local capital to close $171bn climate finance gap

Nigeria is turning to domestic financial institutions and private capital to bridge a staggering $171 billion climate financing gap, as policymakers warn that multilateral funding accounts for less than two percent of the continent’s climate finance needs.

The financing challenge took centre stage at the 2026 Financial Institutions Training Centre (FITC) Sustainability and ESG Conference in Lagos, where regulators, bankers, and development finance leaders agreed that the country’s path to achieving net-zero emissions by 2060 will depend less on external aid and increasingly on local capital markets, green bonds, and sustainability-linked financing.

The discussions come as Nigeria intensifies efforts to mobilise blended finance to support climate adaptation, clean energy, sustainable agriculture, and resilient infrastructure while reducing dependence on increasingly constrained international climate funds.

Philip Ikeazor, deputy governor for economic policy at the Central Bank of Nigeria (CBN), said Africa could no longer rely on traditional sources of climate finance, noting that multilateral climate funds contribute less than two percent of the continent’s total climate financing requirements.

According to him, the funding shortfall presents an opportunity for domestic financial markets to become the primary drivers of sustainable investment.

To accelerate capital mobilisation, Ikeazor called for wider adoption of innovative financing instruments, including green bonds and sustainability-linked loans, while urging financial institutions to integrate climate and environmental risks into mainstream lending and investment decisions.

The remarks reinforce the CBN’s growing emphasis on sustainable finance as regulators increasingly encourage banks to incorporate environmental, social, and governance (ESG) considerations into risk management frameworks.

The conference, organised by FITC in partnership with Sterling Bank, brought together financial institutions, regulators, policymakers, and corporate executives to examine how sustainable finance can support economic inclusion while strengthening resilience against climate-related risks.

For Sterling Bank, the event forms part of its broader strategy to position itself at the forefront of Africa’s transition towards green finance by promoting industry collaboration and mobilising investment into sustainable sectors.

Chizor Malize, managing director and chief executive officer of FITC, said sustainability has moved beyond corporate reporting to become a central pillar of economic strategy.

She argued that Africa’s young population and abundant natural resources present a significant opportunity for long-term growth, but warned that the continent must shift from discussing sustainability to implementing practical solutions capable of building resilient institutions and stronger economies.

“Around the world, Sustainability and ESG have moved from the margins of corporate reporting to the centre of economic strategy,” Malize said.

She added that achieving meaningful progress would require organisations to move beyond individual initiatives towards collective action capable of delivering measurable economic and social impact.

The growing emphasis on local capital also received backing from the development finance community.

Olapeju Ibekwe, chief executive officer of ONE Foundation, said impact investing is becoming increasingly critical to financing scalable solutions across healthcare, education, and climate resilience.

She noted that directing capital towards projects capable of delivering both financial returns and measurable social outcomes would help narrow Africa’s development financing deficit while creating a more inclusive economy.

With the country pursuing a net-zero emissions target by 2060, experts said attracting sufficient private capital will require stronger policy coordination, deeper domestic capital markets, and regulatory frameworks that reward long-term sustainable investments.

The conference concluded with calls for closer collaboration among regulators, financial institutions, development organisations and private investors to mobilise domestic capital at scale and accelerate the structural reforms needed to support Nigeria’s transition to a low-carbon economy.