Yesterday, the French Development Agency (AfD) and the Bank of Industry (BoI) signed a 100 million euro deal for the expansion of green finance in Nigeria to combat climate change.
At the signing event in Lagos, Olukayode Pitan, the managing director of BoI, stated that AFD had approved the transaction as part of its Transforming Financial Systems for Climate (TFSC) Program with the Green Climate Fund (GCF).
According to Pitan, the TFSC is a $650 million program created in 17 nations for projects involving 100% climate investments.
He claims that by combining diverse concessional resources, the 10-year facility is reasonably priced at 2.47 percent annually with a four-year moratorium.
He promised that the credit facility’s primary goal will be to finance projects that aid in the adaptation or mitigation of climate change.
He clarified that this would be primarily targeted at initiatives centered on clean urban mobility, climate-smart agriculture, low-carbon and efficient energy generation, and other initiatives.
“This is the start of a long-term relationship that will benefit both parties, and it is a big step for BoI as we expand our capacity for green lending,” said the company.
“Given the serious threat that climate change poses to equitable and sustainable development in Nigeria, it is critical for us at BoI to take the lead in mobilizing capital for green and sustainable investment,” he said.
AFD’s country director, Xavier Muron, emphasized the significance of such a project within the context of the global struggle against climate change.
Muron pointed out that numerous parts of Nigeria are likely to experience the consequences of climate change, making the country particularly susceptible to it.
He claims that research indicates that climate change would cost Nigeria $400 billion, or six to thirteen percent of the nation’s GDP (GDP).
As Nigeria prepares to unveil its Energy Transition Plan, he continued, this new credit line is a crucial step toward realizing the goals of the Paris Agreement.
According to Muron, the partnership’s primary goal is to encourage the nation’s financial systems to place more emphasis on the climate issue and the investments required to combat climate change’s negative effects.
“After this partnership, we hope that other financial institutions key into it as well as the needs are huge when it comes to climate change for some climate smart and friendly investments.”
“As development institutions, we have to do something to help the government act, seeing that Nigeria is looking forward to implementing its net zero emissions by 2060.”
“We reiterate our commitment towards climate change with the project and are proud to work with the BoI,” he said.
Muron continued by saying that the financing package would also include a grant facility worth €2.5 million for a technical support program meant to integrate climate finance into BoI’s strategy and operations.
“It will support capacity building for BoI and its customers, thereby providing tools for effective identification and development of eligible bankable climate-related projects as well as improving the readiness of the bank’s customers to implement green practices in their operations.”
“This transaction also highlights both AfD’s and BoI’s longstanding commitment to achieving the UN’s Sustainable Development Goals (SDGs).”
“BoI operates under a robust Environment and Social Governance (ESG) framework that has been integrated into its operations with a monitoring and reporting system,” he said.