By Faridat Salifu
Nigeria’s efforts to mobilise climate finance must undergo urgent reform if the country is to close its $80 billion annual sustainable development financing gap and meet both climate and social development goals, a new review of Nigeria’s green bond strategy has revealed.
Despite launching Africa’s first sovereign green bond in 2017 and raising over N58.5 billion through six issuances since then, analysts say the current approach has prioritised large-scale infrastructure while neglecting the sectors and communities most vulnerable to climate change.
An overwhelming 78 percent of the green bond proceeds to date have been channelled into energy projects, leaving sectors like agriculture and water which are critical to food security and rural resilience largely underfunded.
Experts say this imbalance ignores the fact that over 40 percent of Nigerians face food insecurity and 33 percent live in multidimensional poverty, making them the most exposed to climate-related shocks such as droughts, flooding, and soil degradation.
The financing structure itself has also been criticised for its exclusivity, with pension funds accounting for 91 percent of green bond holdings, effectively shutting out retail investors, civil society, and grassroots actors from participating in the green economy.
Analysts argue that for climate finance to be transformative, it must go beyond infrastructure to deliver tangible improvements in local resilience, social inclusion, and livelihoods.
The report highlights examples from other African countries that offer lessons for Nigeria.
In Kenya, Acorn Holdings issued a $41 million green bond in 2019 to fund climate-friendly student housing, cutting utility costs by 40 percent and allocating 22 percent of the issuance to retail investors using mobile platforms.
Ghana’s partnership with the International Finance Corporation (IFC) has led to a green bond framework that mandates independent impact audits and requires part of all proceeds to be directed toward climate adaptation in flood-prone communities.
Both countries have embedded equity and accountability into their climate finance frameworks—elements lacking in Nigeria’s current model.
Nigeria’s institutional coordination has also drawn criticism.
The fragmented roles of the Debt Management Office, the Ministry of Environment, and the National Council on Climate Change have led to delays, duplication of efforts, and underperformance of planned finance initiatives.
To resolve this, experts propose the creation of a unified Climate Finance Authority to coordinate project pipelines, maintain a national green project registry, and enforce adaptation spending quotas.
The review recommends a greater focus on subnational finance, citing Lagos State’s Climate Adaptation and Resilience Plan (LCARP) as a model that can be supported with matching grants from federal green bond proceeds.
New financial instruments are also being proposed to diversify the investor base.
A naira-eurobond hybrid model could allow for both domestic retail participation and dollar-denominated diaspora investment, helping to stabilise inflows amid exchange rate volatility.
A Green SME Window has been suggested to provide blended finance—combining grants and low-interest loans—for renewable energy startups and local adaptation enterprises, ensuring that climate finance also drives innovation and job creation.
To address transparency concerns, the review calls for all climate-financed projects to be certified with publicly disclosed metrics on both environmental and social outcomes, including job creation, skills transfer, and poverty reduction.
It proposes the launch of a Citizen Climate Budget Portal to enable real-time tracking of expenditure and quarterly impact reports, as well as Annual Community Climate Finance Reviews to gather feedback from beneficiaries.
“Nigeria must treat climate finance not just as a funding vehicle for clean infrastructure, but as a developmental tool to tackle poverty, build resilience, and empower local communities,” the report concludes.
With plans to issue another N300 billion in green bonds in 2025, experts say the country must urgently revise its climate finance governance model to align with inclusive, accountable, and transformative development goals.
