Nigeria could unlock new funding opportunities for renewable energy and other climate-related projects through the development of its carbon market, but attracting investors will depend on putting the right policies and project structures in place.
Mubarak Moukaila, Head of Finance and Sustainable Development at the West African Development Bank (BOAD), said the country needs stronger institutions, effective regulations and well-prepared projects to make its carbon market attractive to local and international investors.
He explained that the major challenge facing climate financing in Africa is not necessarily a lack of money, but the inability of many countries to develop projects that meet investors’ expectations.
Speaking during an interview at the Africa Financial Summit (AFIS) in Luanda, Angola, Moukaila said substantial investment funds were available globally, but many African projects were not properly structured to secure the needed support.
As part of efforts to address the problem, BOAD is working with Nigeria’s National Council on Climate Change (NCCC) to establish the necessary institutional and regulatory framework for the country’s carbon market.
A properly developed market could help Nigeria attract private funding for solar energy, hydropower, mini-grids, climate adaptation and other environmentally friendly infrastructure.
Moukaila noted that BOAD had established a project development facility in 2023 to help project developers turn initial ideas into investment-ready proposals. The initiative provides support with project design and preparation to ensure they meet the requirements of financial institutions and development partners.
The bank is also exploring financing arrangements that combine private investments and funds raised through capital markets with concessional financing to make projects more attractive to commercial investors.
According to him, private investors will play a major role in Africa’s climate transition, with BOAD estimates indicating that between 80 and 85 per cent of the funding required to achieve African countries’ climate commitments must come from the private sector.
He also identified a shortage of technical expertise as another obstacle preventing countries from taking full advantage of carbon markets.
To improve capacity, BOAD has been working through the West African Alliance on Carbon Markets and Climate Finance, established in 2017 to promote knowledge sharing and help countries develop the necessary carbon market structures.
Moukaila pointed to Ghana as an example of what regional cooperation and effective planning can achieve. He said the country had developed its carbon market framework and became the first globally to mobilise funding under Article 6 of the Paris Agreement.
However, he warned that securing investment commitments does not always translate into completed projects. According to him, less than 30 per cent of the resources mobilised since the 2015 adoption of the Paris Agreement have resulted in actual project implementation.
He stressed that African countries must pay greater attention to project preparation and execution, ensuring that local communities and intended beneficiaries are considered from the beginning.
For Nigeria, he said, establishing a credible carbon market will be an important step towards attracting climate investment, but its success will ultimately depend on the country’s ability to develop projects that investors can confidently finance and implement.
