The French Development Agency (AfD) and Nigeria’s Bank of Industry have agreed to a contract worth 100 million euros that would increase green finance in Nigeria and combat climate change.
Olukayode Pitan, the Managing Director of BoI, and Xavier Muron, the Country Director of AfD, inked the agreement in Lagos, according to the News Agency of Nigeria.
He stated the transaction was approved by AfD under its Transforming Financial Systems for Climate (TFSC) Programme with the Green Climate Fund (GCF).
The BoI Chief said the 10-year facility is priced at 2.47% per annum with a four-year moratorium by mixing various concessional resources, adding that it would focus on financing investments that contribute to climate change mitigation or adaptation.
He said, “This is the beginning of a long-term mutually beneficial relationship and a significant step for BoI as we scale up our green-lending capacity.”
“Given the serious threat that climate change poses to equitable and sustainable development in Nigeria, it is critical for us at BoI to take the lead in mobilizing capital for green and sustainable investment.”
Nigeria is extremely vulnerable to climate change, and various locations are likely to experience the effects of global warming, according to AfD’s Country Director, Xavier Muron.
He stated that Nigeria needs $400 billion, which equates to 6% to 13% of the nation’s GDP (GDP).
He said the credit line was a key milestone towards the achievement of the Paris Agreement and was timely since Nigeria looked forward to launching its Energy Transition Plan.
“After this partnership, we hope that other financial institutions key into it as well as the needs are huge when it comes to climate change for some climate-smart and friendly investments.
“As development institutions, we have to do something to help the government act, seeing that Nigeria is looking forward to implementing its net zero emissions by 2060.
“We reiterate our commitment towards climate change with the project and are proud to work with the BoI,” he said.
Muron added that the financing package would also include a 2.5 million Euro grant dedicated to a technical assistance program aimed at mainstreaming climate finance within BoI’s strategy and operations.
“It will support capacity building for BoI and its customers, thereby providing tools for identification and development of bankable climate-related projects as well as improving the readiness of the bank’s customers to implement green practices in their operations.
“This transaction also highlights both AfD’s and BoI’s longstanding commitment to achieving the UN’s Sustainable Development Goals (SDGs).