Experts have called for increased climate financing for Nigeria’s smallholder farmers with annual investment potential estimated at $30bn as the country develops a framework to direct funds towards agricultural adaptation and resilience.
The proposed framework is expected to help farmers access financing to manage climate-related risks including drought flooding and waterlogging while encouraging financial institutions to provide lending options suited to their needs.
YAPU Solutions Managing Director Christoph Junghleisch gave the investment estimate at a Taxonomy Validation Workshop on Adaptation and Resilience Solutions organised by the Presidential Implementation Committee on Technology Transfer (PICTT) in collaboration with YAPU Solutions.
Junghleisch said the organisation was working with PICTT to develop a framework linking climate adaptation solutions to appropriate sources of finance.
He said the initial plan could involve a pilot project valued at between $100m and $200m with a target of scaling up financing to $1bn in the first expansion phase.
He clarified however that the figures were targets not confirmed funding commitments.
Junghleisch said digital technology would be central to ensuring that climate funds reached their intended beneficiaries with a system designed to track disbursements and make transactions transparent and auditable.
‘What we are focusing on is smart use of technology optimisation of processes that enable you to document every cent Naira that you are basically bringing to the smallholder farmers’ he said.
He added that YAPU was engaging development finance partners including the Bank of Agriculture and the African Development Fund while seeking to attract private-sector investment.
The Chairman of PICTT Dr Dahiru Muhammed said the initiative aimed to develop an implementation framework for Nigeria’s national taxonomy which defines activities eligible for climate finance.
He explained that the Federal Ministry of Finance and the United Nations Development Programme (UNDP) were developing the national taxonomy. At the same time PICTT and its partners focused on making the framework operational and accessible to rural communities.
‘Having a national taxonomy is good but without defining which activity qualifies as adaptive or resilient to climate change there is no way you can access the financing’ Muhammed said.
He noted that stakeholders had not yet assessed the initiative’s funding requirements as they were still developing the framework and identifying implementation partners.
Muhammed also called for collaboration among federal state and local governments to tackle climate-related challenges particularly flooding through improved infrastructure and effective mitigation measures.
WorldFish’s Country Representative in Nigeria Dr Charles Nyangbe said the country needed financial instruments tailored to the different climate risks confronting farmers across its regions.
He explained that farmers in northern Nigeria faced drought while those in southern communities dealt with flooding and waterlogging making different adaptation strategies and financing arrangements necessary.
Nyangbe said the proposed taxonomy could help financial institutions develop sustainable lending mechanisms for farmers stressing the need to distinguish climate finance from conventional government budgetary allocations.
He advocated index-based insurance and blended finance to help farmers manage climate-related risks.
He also urged the government to provide targeted climate funding through commercial banks and other financial institutions using public funds as guarantees to encourage lending to farmers.
‘Government should come up with an envelope of funding that is targeted at climate financing give it to financial institutions give it to commercial banks so that they can lend’ he said.
Nyangbe said Nigeria had attracted about $2.5bn in climate-related financing but the amount remained far below estimated requirements.
He called for broader coverage of climate financing to include livestock fisheries and aquaculture noting that discussions often placed excessive emphasis on crop production.
According to him flooding could destroy fish ponds and aquaculture facilities resulting in substantial losses for farmers.
The workshop brought together financial institutions agricultural experts and other stakeholders to validate the taxonomy identify appropriate financing instruments and develop an implementation timeline.
The proposed framework is expected to guide climate investments towards vulnerable farming communities and strengthen their capacity to withstand climate-related shocks. However the $30bn annual investment estimate and the proposed pilot funding remain prospective targets rather than secured commitments.