Aligning ODA to Climate Finance in Nigeria

Group advocates for Climate finance in Nigeria

Official Development Assistance (ODA) is significant in funding the National Adaptation Strategy and Plan of Action on Climate Change for Nigeria (NASPA-CCN). Therefore; linking ODA to fund climate change mitigation and adaptation costs is a necessity for the country in attaining NASPA-CCN. University of Norte Dame Global Adaptation Index (ND-GAIN) ranks Nigeria 147 out of 180 countries in 2014. Nigeria was only better by 13.5 scores from the bottom rank country (Eritrea). In addition to high vulnerability to climate change, the financing gap is enormous. However; ODA can serve as an instrument to improve mobilizing funds to curb the impact of climate change in Nigeria. Thus, an increase in climate finance in Nigeria will help in solving the deteriorating environment.

Roles of ODA to climate finance

ODA remains the major source of financing climate change impacts in Nigeria. But still, there are other sources to finance these impacts in the country. These include public sources, institutional investors, and green bond. However, due to the structure of the Nigerian economy, accessibility to these sources are limited. Affirmatively, the permanent secretary to the ministry of environment identifies “conditions associated with climate funds and lack of capacity in preparing implementable projects” as major constraints to accessing funds.

Despite ODA’s relevance to climate finance in Nigeria, the amount of ODA channels for climate finance is insignificant. That is, climate relevantly projects are underfunded. Organisation for Economic Cooperation and Development/Development Assistance Committee (OECD/DAC) data fails to link directly Nigeria climate finance to ODA, thus, data poverty ensues.

Furthermore, stakeholders take climate finance less seriously because they see development in term of economic growth alone. For example, the ministry of environment capital expenditure for 2014 budget in Nigeria is just 0.15% of the whole budget. Moreover, the budget expanded on physical projects, which failed to build a knowledge repository in order to have a competitive edge in securing global climate funds. Playing down the importance of climate finance by stakeholders has resulted in limited funds. This results in a huge climate change finance gap in Nigeria.

Align ODA to climate finance

Nevertheless, one major way to overturn these negative trends is by aligning ODA to NASPA-CCN. The alignment has to recognize international donors to provide technical and financial supports.  The donors can provide their help in terms of institutional capacity building, reducing climate adaptation-related transaction barrier and research. An ODA that channels resources to develop a carbon-tax system in the Niger-Delta region, for example, will help in mitigating against established polluted air and environmental degradation in the region. In the same vein, ODA that enhances preparations for competitive and implementable projects for Climate Funds increases chances for mobilizing funds from other sources. This lack of competitiveness is one of the major reasons why Nigeria cannot access climate funds.

Rwanda with roughly 7% of Nigerian population secures broadly the same amount as Nigeria, which is the tenth of what South Africa secured in 2015.

The ODA donors’ community to Nigeria should have a rethink on the direction of their development assistance. They can do this by targeting more climate-related funding in capacity building, strengthening relevant institutions, and increasing relevant knowledge base. Therefore, improving on these factors is a pathway to mobilizing more funds to mitigate and adapt to climate change in Nigeria.

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6 Thoughts to “Aligning ODA to Climate Finance in Nigeria”

  1. Riti Joshua

    In my opinion, I think is a wonderful write up. You have said much about aligning ODA in financing climate change threats in Nigeria. However, data on ODA to Nigeria has declined over the years. In fact, sectoral allocation shows that health sector takes the largest share of about 35%. More emphasis should be laid on domestic resource mobilization on climate financing. Like you mentioned stakeholders including private sector do not take climate change issues seriously. There is need for awareness on the need for stakeholders and private sectors alike to join in the fight against climate change by investing in climate finance. Keep it up Emma. It’s a wonderful write-up.

    1. Thank you mr Riti for your wonderful contribution, and for opening up another point on sectoral allocation and declining ODA.

  2. Riti Joshua

    I addition, when you critically examine the type of ODA financing, apart from been declining over the years, another striking issue is that a larger portion of the ODA is in form of debt cancellation especially in 2005 and 2006. This period coincided with the period when Ngozi Okonjo-Iweala (former managing director of World Bank) was the Nigerian finance minister. The percentage of grants and concessional loans were so minimal to make any appreciable impacts. In as much as a country rely on ODA from MDBs, the country should try as much as possible to source for funds domestically. ODA should play a catalytic role in domestic resource mobilization.

    1. You’re right mr Riti on the ODA flow to Nigeria, in addition, what we need to do domestically is having a transparent syetem and have implementable project that attract ODA and other sources of development financing.

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