Nigeria and other African nations face a $213.4 billion climate financing gap.
A report from the Climate Policy Initiative (CPI) stressed the need for private investment and carbon markets to drive sustainable growth across the continent.
The Climate Policy Initiative (CPI), an independent non-profit research group, has highlighted the urgent need for $213.4 billion in climate financing for Nigeria and other African nations.
“Africa’s Climate Financing Gap: The Role Of Private Sector Investment And Carbon Markets”
According to their latest report, Africa’s Carbon Market: Paving the Way to a Sustainable Future, only 23 per cent of the climate finance committed to Nigeria in 2020 came from the private sector, a figure deemed insufficient to meet the country’s climate goals.
Furthermore, the report emphasises that the public sector alone cannot close Africa’s climate financing gap.
“The private sector is increasingly becoming the main driver of climate action,” it notes, with private investments accounting for 51 per cent of global climate financing in 2022.
However, many African countries struggle to attract private capital due to underdeveloped financial markets.
One promising solution lies in the growing demand for carbon credits.
Read Also: Nigeria Presses For Greater Climate Adaptation Funding As COP29 Kicks Off
As large companies seek to offset emissions and meet net-zero targets, the need for Voluntary Carbon Markets (VCMs) is expected to rise, which could, in turn, direct private capital into Africa.
These markets allow clean energy projects to generate additional income, thus improving profitability and attracting investment.
To unlock Africa’s potential in carbon markets, the report stresses the importance of developing strong frameworks for monitoring and verifying emissions.
Despite currently generating only 2 per cent of its carbon credit potential, Africa could tap into much more with the right regulations in place.
In conclusion, the CPI believes that carbon pricing mechanisms, which incentivise reducing greenhouse gas emissions, could catalyse much-needed private sector investment in Africa’s climate initiatives.
