The UNFCCC (United Nations Framework Convention on Climate Change) 2015 in Paris agreed to open a new framework in Climate Change conversation which was termed Climate Finance, Policies, and Markets. Climate finance is the planning, sourcing, acquiring, and utilizing of monetary resources to reduce emissions and enhance sink gases. That is it involves the use of funds to reduce the exposure of, maintains and increases the flexibility of human and ecological systems to mitigate and adapt to climate change. Across the globe and in Nigeria, the impacts of climate change has resulted to a warmer planet which has become the most articulated word and has caused a lot of damages in recent years, with serious impact for all vulnerable people and societies at large.
WHAT MODELS WORK FOR NIGERIA?
Climate finance is a fundamental building block in challenging the severe threats of climate change on the both global and Nigerian economies. Nigeria has continuously experienced a great rise in water pollution, air pollution, desertification, oil spills, deforestation, solid waste, flooding, erosion, and an unfavorable weather conditions. These unforeseen occurrences have resulted in huge loss of properties, infrastructure deterioration, domestic migration, shoddy health care and negative impact on various sectors of the economy at large.
These are essential signals of the need to mobilize and source for both long-term and medium-term funding for capital formation by using both the Nigeria stock exchange and also the debt market to focus on these issues. With increasing clues that climate change impacts are already occurring and increasing, in which any further delay will present huge and catastrophic risks to the Nigeria’s financial services sector. The finance industry is mainly built around evaluating and managing all kinds of perils which serve as the basis for investment every decision. But up to the present, only a few in the financial services sector have incorporated climate risks into investment their decision-making. The Green bond cannot be the only instrument to achieve a Green economy in Nigeria because it has limitations regarding the time frame to gather these funds. They are no available data, so there is the need to introduce other instruments like carbon market instruments because the financial gap is very high. The Nigerian government needs to adopt ESG considerations in all private investments, which are evolving from a risk management practice to a driver of innovation and new opportunities that create long-term.
THE WAY FORWARD
The Nigerian government should accelerate and promote climate-relevant financial policies by teaming up with a range of players in the sector so as to increase capital inflows and also develop innovative financial approaches across various asset classes, notably through the use of capacity-building initiatives.
The Nigerian government should also develop and employ climate risk management practices.
The Nigerian government should ensure that it promotes the development of a climate analytics industry or sector; and create innovative financial instruments for climate adaptation and resilience.
Climate change has affected our economy, but it is left to us to know how to utilize our climate finance for the mitigation and adaptation activities to enable the transition towards low-carbon, climate-resistant growth and development through capacity building, Research and development and economic development.
There is also the need for the federal government of Nigeria to include climate fund in the annual budget so as to help reduce its impact in Nigeria. The federal government needs to invest and support zero-emissions technology