Nigeria’s severe Climate Change impacts and the meager funds from global Climate Finance that fall short of the required funding have awakened the reality that the country needs to unlock other sources of climate Finance as a viable and necessary alternative. Estimates place Nigeria’s annual climate finance need at nearly USD 30 billion until 2030, but in 2021/22, the country mobilized only USD 2.5 billion—just 8% of the target. This has triggered a growing realization that Nigeria must look inward and unlock domestic climate finance to power its response.
Within the country, domestic Revenue generation holds vast untapped potential. While politically sensitive, tools such as carbon taxes, plastic levies, and fuel surcharges could simultaneously reduce Emissions and generate climate finance. Despite modest progress, government budgetary allotments currently remain inadequate. In the 2025 Appropriations Act, the Ministry of Environment received ₦164 billion (about USD 109 million), which is a drop in the ocean compared to the country’s needs. Although federal budgets have begun to reflect some climate priorities, the percentage allotted still amounts to less than 1% of overall government spending.
Leveraging sovereign bonds and NSIA as a catalyst.
Regardless, there are signs of hope. Nigeria broke ground in Africa by issuing sovereign green Bonds in 2017 and 2019. While the initial projects were limited by weak pipelines, they demonstrated strong investor interest. Encouraged by this, the government has proposed a new USD 250 million green bond in late 2024, adding to the 2 sovereign green bonds already issued—signaling renewed commitment. Beyond sovereign bonds, the Nigeria Sovereign Investment Authority (NSIA) is another key instrument in the country’s toolbox.
Through its Infrastructure Fund and Future Generations Fund, the NSIA has the capacity to channel resources into climate-resilient infrastructure, renewable energy, and sustainable agriculture—areas that both align with climate goals and drive economic growth. Opportunities also lie in the state-owned financial institutions like the Development Bank of Nigeria (DBN), Bank of Industry (BOl), and NSIA. For instance, the NSIA recently launched Carbon Vista for investing in carbon market projects. Though still under development, the creation of the Climate Change Fund (CCF) under the Climate Change Act 2021 also offers an avenue.
Exploring tax-based solutions and public-private partnerships.
Tax-based solutions are also being explored. Though traditionally met with public resistance, carbon pricing mechanisms—such as plastic levies, fuel taxes, and carbon taxes—could generate significant revenue while encouraging behavior change. The Nigerian Carbon Market Activation Plan (NCMAP) aims to institutionalize such tools and establish a credible carbon market framework. Public-private partnerships (PPPs) provide another promising pathway. By offering Tax incentives, concessional loans, or guarantees, the government can attract private investment into clean energy, transport, and infrastructure.
Already, Nigeria is seeing increased interest from Renewable Energy companies and Agri-tech firms looking to scale sustainable innovations. Importantly, domestic climate finance is not only about raising money—it’s about spending better. With better integration of climate priorities into development planning, government agencies can ensure that every Naira spent serves dual roles in driving growth and building resilience. A 2024 report by UKNiAF revealed that Nigerian climate finance is predominantly debt-based, accounting for over 75% of funding. To avoid deeper debt traps, the country must develop a robust, homegrown finance ecosystem.
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If properly unlocked and efficiently managed, domestic finance can reduce dependence on external flows while empowering the nation to chart its own low-carbon, climate-resilient future. Ultimately, Nigeria’s path to Climate Resilience depends on bold fiscal reforms, innovative instruments, and a deliberate shift in mindset. Unlocking domestic climate finance is not just a necessity—it is a strategic imperative. As the window for Climate Action narrows, the push for homegrown solutions may be the most powerful tool Nigeria has to protect its people, economy, and environment.