By Faridat Salifu
As the global climate crisis intensifies, developing nations like Nigeria are increasingly vulnerable to its impacts.
Recent catastrophic flooding in states such as Benue, Borno, and Jigawa has revealed the harsh realities faced by millions.
These floods, exacerbated by climate change, have led to humanitarian emergencies characterized by loss of life, widespread public health issues, food shortages, and significant internal displacement.
Although some observers might mistakenly attribute these challenges to internal conflict, the reality is that they stem from devastating environmental disasters.
In the aftermath of these floods, while Nigeria’s states and federal emergency response teams have made concerted efforts to address immediate humanitarian needs, the long-term socio-economic consequences often remain unaddressed.
Insufficient financial resources hinder the development of critical infrastructure necessary to mitigate future disasters.
Although international climate finance is crucial, it frequently encounters bureaucratic hurdles and fluctuating political conditions that can delay necessary support.
Therefore, Nigeria must urgently explore domestic funding solutions to meet its climate action needs.
The Imperative for Domestic Financing
Recent dialogues, including insights from the Finance in Common Summit held in Cape Town, underscore the consensus that domestic financing is the cornerstone of sustainable climate action.
Much like a solid foundation supports a construction project, domestic funding can catalyze international support.
When the Nigerian government allocates budgetary resources toward climate adaptation, such as coastal defenses or flood prevention, it sends a strong signal to potential international investors regarding the nation’s priorities.
This proactive stance can encourage private sector involvement and attract multilateral funding, fostering an ecosystem conducive to climate resilience.
Under the leadership of President Bola Ahmed Tinubu, the administration has undertaken significant reforms to stabilize the economy and manage a ballooning foreign debt profile inherited from previous governments.
To maintain this positive trajectory, it is crucial to harness domestic financial resources that mitigate exposure to foreign currency risks.
Investing in domestic climate initiatives not only reduces dependency on volatile external funding but also enhances local ownership, empowering communities to drive their climate resilience strategies.
Research indicates that investing in climate resilience has substantial economic benefits.
For every dollar spent on adaptation measures, studies suggest potential returns of up to ten dollars in avoided costs, such as disaster recovery expenses and economic losses. Mobilizing domestic funding enables Nigeria not only to address climate impacts but also to reap the rewards of a greener, more sustainable economy.
This funding stimulates local economic activity through job creation and drives innovation, tapping into the remarkable talents of Nigerians who have already begun developing homegrown solutions.
Given the pressing need for funding in various critical development sectors, including healthcare and education, the question arises: where can Nigeria source domestic funding for climate action? Several promising avenues can be explored.
Public sector budget allocations serve as a vital instrument for government intent and direction.
Unfortunately, current budget allocations for climate-related activities remain insufficient. In the recently signed 2025 Appropriation Act, the Ministry of Environment received approximately $109 million, which pales in comparison to the estimated $20 billion needed annually to effectively tackle climate change.
Increasing financial commitments for ministries and agencies responsible for climate action is critical, and state and local governments should also dedicate portions of their budgets to address region-specific climate challenges.
Sovereign green bonds represent another avenue for raising domestic funds aimed at financing climate-focused projects.
Nigeria’s issuance of these bonds in 2017 and 2019 has successfully mobilized resources for renewable energy, afforestation, and other initiatives. Despite past challenges, such as inadequate project pipelines leading to losses, expanding the scale and frequency of green bond issuances could provide a steady funding stream for climate initiatives.
The Nigeria Sovereign Investment Authority (NSIA) can strategically allocate a portion of its funds to climate-related investments. Both the Infrastructure Fund and Future Generations Fund are well-suited for promoting sustainable development, offering long-term returns while addressing climate challenges.
Introducing or reforming climate-related taxes and levies can generate significant revenue for climate action.
While tax measures are often unpopular, they are essential for government revenue. Implementing a carbon tax on high-emission industries can incentivize cleaner production methods while funding climate projects. Similarly, levies on single-use plastics can reduce pollution and support waste management efforts.
Engaging the private sector through public-private partnerships (PPPs) can unlock additional funding for climate-resilient infrastructure and renewable energy projects.
By offering incentives such as tax breaks and guarantees, the government can encourage private investment in climate initiatives.
Nigeria’s banking and financial sector also plays a crucial role in driving climate finance. Policies mandating commercial banks to allocate a portion of their loan portfolios to green projects can stimulate investment in renewable energy and climate-smart agriculture.
Further more, specialized financial instruments, such as green loans and climate insurance, can support vulnerable communities.
Local philanthropists and community organizations can contribute to climate finance efforts. Wealthy individuals, corporate foundations, and diaspora networks can channel funds toward initiatives such as reforestation, water conservation, and disaster preparedness.
Nigeria has already witnessed the success of domestic climate financing initiatives. The Green Bond Program, for instance, has funded projects including solar mini-grids and reforestation efforts, showcasing the potential of innovative financing mechanisms.
Notable corporate green bonds, such as those issued by Access Corp and North South Power Company Ltd, further illustrate the viability of domestic funding avenues for climate action.
Sectors like renewable energy present immense untapped potential. By creating favorable investment conditions, Nigeria can attract domestic capital to develop solar farms, wind projects, and hydropower plants.
The agriculture sector can also benefit from funding for climate-smart practices, including agroforestry and improved irrigation systems.
Moreover, emerging sectors like waste-to-energy systems and marine economies hold promising opportunities for climate finance.
Despite the significant potential for domestic climate finance, several challenges must be addressed.
Limited fiscal space remains a key obstacle, as competing priorities and revenue constraints hinder adequate budgetary allocations for climate initiatives.
However, expanding the tax base, curbing leakages, and increasing private sector participation can help generate additional resources.
Lack of awareness among stakeholders regarding the benefits of climate finance also poses a challenge.
It is essential to shift the narrative surrounding climate finance, emphasizing its economic implications and the potential for job creation and infrastructure development.
This responsibility extends beyond the government to include civil society and private sector actors.
Strengthening the institutional capacity of government agencies and financial institutions is critical for effective utilization of funds.
While there have been capacity-building initiatives at the federal level, more efforts are needed at sub-national levels to enhance project pipeline generation and execution.
Nigeria’s climate resilience depends on its ability to mobilize both domestic and international resources to build a sustainable future.
Domestic funding sources provide the foundation necessary to scale climate financing ambitions.
By embracing innovative financing mechanisms, fostering private sector engagement, and empowering local communities, Nigeria can effectively tackle the challenges posed by climate change.
It is imperative for all stakeholders government, private sector, civil society, and individuals to work collaboratively to unlock the potential of domestic funding.
This collective commitment involves prioritizing climate action in national development plans and budgets, promoting transparency and accountability in the management of climate funds, investing in capacity building and knowledge sharing, fostering innovation and entrepreneurship in climate-friendly technologies, and increasing public awareness and participation in climate initiatives.
By looking inward and leveraging its domestic resources, Nigeria can not only address immediate climate challenges but also set a precedent for sustainable development.
In doing so, the nation can create a resilient future that benefits both its people and the environment, paving the way for greater mobilization of climate funding and fostering a sustainable model for development.