Nigeria’s Opportunities and Failures in Utilizing the AfDB-CIF Multilateral Climate Finance Pipeline
Nigeria has failed to utilize climate-adjacent financing for sustainable development, as currency woes and corruption scupper progress.
The biggest roadblock to climate-related development usually comes from insufficient funding. There is hesitancy among the private sector to invest in climate adaptation or mitigation projects due to the perception that these projects would not provide a solid return on investment. This is the problem to which Climate Investment Funds (CIF) was created as a solution. CIF is the largest multilateral climate fund providing finance for climate innovation in the middle- and lower-income countries through multilateral development banks (MDBs).
Donor countries and organizations have contributed or pledged over US$11 billion to CIF, for the provision of long-term financing of as many as 400 large-scale climate-related projects. The CIF in turn invests these funds through different programs, all aimed at transforming economies through renewable energy, sustainable transport, sustainable forest solutions, and building resiliency to climate shocks. Some of the programs the CIF operates through are:
Accelerating Coal Transition Investment Program, which seeks to support countries transitioning away from reliance on coal as a primary energy source;
Global Energy Storage Program, providing support for energy storage, an integral part of renewable energy infrastructure given the transient nature of weather-based energy;
Industry Decarbonization Program, which supports mainly middle-income countries in the decarbonization of well-established fossil fuel-based energy systems;
Nature, People, and Climate, which aims to take advantage of the vast experience held by indigenous peoples across the world in land management and harness it towards creating and implementing proper land use and sustainable practices;
Smart Cities, helping growing countries with growing cities and rapid urbanization to ensure that growth is sustainable, installing green infrastructure such as carbon-neutral buildings;
Clean Technology Fund, which is often targeted at fossil fuel-dependent low-income countries for the installation and deployment of large-scale, low-carbon energy infrastructure;
Forest Investment Program, which aims to protect and preserve forests as a carbon sink and tackle the prevalent issue of deforestation and forest degradation;
Scaling Up Renewable Energy Program in Low-Income Countries, which supports the deployment of renewable energy installations in communities with no access to electricity, funding projects such as solar-, wind-, or geothermal-based mini-grids;
Pilot Program for Climate Resilience, a climate adaptation program targeted at supporting the world’s most vulnerable countries, finding ways to build up climate resilience to increasingly adverse conditions.
The African Development Bank is partnering with CIF for projects within the purview of the latter four of those programs, having selected these as being the priority areas on the African continent. The AfDB has approved projects to the tune of $2.94 billion, with $1.99 billion coming from the AfDB and $0.95 billion coming from CIF.
Nigeria as a beneficiary
Various African countries have taken advantage of the CIF/AfDB to develop projects in line with these programs. The projects have been diverse, from concentrated solar power projects in Morocco to Burkina Faso’s Poverty Reduction Through the Development of the Cashew Sector and water resources development and mobilization in Niger.
Nigeria has been able to obtain funding to the tune of $50 million for the establishment of a line of credit dedicated to renewable energy and energy efficiency projects. The goal is to support financing for small and medium enterprises with adjacent solutions. Approved by the AfDB and CIF in 2014, the project will run from 2016 to 2028, with $1.25 million coming from CIF and $48.75 million from the AfDB.
Another project which the country has been able to obtain funding for is the Lagos Cable Car Project, to the tune of $70 million, with $20 million coming from CIF and the rest from the AfDB. This project was slated to connect the Lagos Mainland to Lagos Island and Victoria Island through a 12.85 km-long cable car. Per Ventures Africa, the project, which was supposed to be completed in 2015, would produce a cable car system capable of making 240,000 trips daily.
This would save from 70 to 120 minutes (about 2 hours) of commute time for residents, and crucially take a good number of cars off the road. In a city with a population of nearly 24 million slated to rise to as much as 50 million by 2050, traffic congestion is already a major issue. An overwhelmed public transport system pushes many to drive privately, further congesting an already-inadequate road network. In addition, Lagos's large vehicular traffic causes major emissions, responsible for the city's poor air quality.
Sadly, neither of these projects has had the desired effect. The Lagos Cable Car project has yet to commence construction, long after the planned completion date. The credit line has made minimal headway, providing financing for one SME which has led to mitigated emissions of 40,359 tons of CO2. All other funding has been canceled due to the country’s currency fluctuation issues.
The nation’s political and economic instability, along with the perceived incompetence and corruption of its government, is harming the country’s ability to attract private investment and multilateral funding. With a new administration on the horizon, one can only hope that the country’s government will turn its attention to improving the lives of its citizens. One can look towards countries like Ghana, Mozambique, and Burkina Faso which have used the AfDB-CIF pipeline to complete projects in carbon stocks, forestry conservation, and land & water resources management respectively, all for the benefit of their people and the economy at large.
Misan9 months ago
Really insightful piece!