The Bank of Industry (BoI) on Tuesday signed an agreement worth 100 million Euros with the French Development Agency (AfD) for the expansion of green finance in Nigeria to tackle climate change.
Managing Director, BoI, Mr Olukayode Pitan, said at the signing ceremony in Lagos that the transaction was approved by AFD under its Transforming Financial Systems for Climate (TFSC) Programme with the Green Climate Fund (GCF).
Pitan said TFSC was a 650 million dollar programme developed in 17 countries for 100 per cent climate investments projects.
According to him, the 10-year facility is priced at 2.47 per cent per annum with a four-year moratorium by mixing various concessional resources.
He pledged that the credit facility would focus on financing investments that contributed to climate change mitigation or adaptation.
This, he explained, would be specifically projects focused on renewable energy, low carbon and efficient energy generation, climate smart agriculture technologies, clean urban transportation and others.
“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 mobilising capital for green and sustainable investment,” he said.
The Country director of AFD, Mr Xavier Muron, highlighted the importance of such project in the framework of the fight against climate change globally.
Muron noted that Nigeria was highly vulnerable to climate change with several regions likely to suffer from the effects of global warming.
According to him, studies show that climate change will cause Nigeria about 400 billions dollars, that is between 6 per cent to 13 per cent of the country’s Gross Domestic Product (GDP).
He added that this new 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.
Muron said the main objective of the partnership was to spur the country’s financing systems to focus more on climate aspect and the investment needs to fight the adverse impact of climate change.
“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 programme 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).
“BoI operates under a robust Environment and Social Governance (ESG) framework that has been integrated into its operations with a monitoring and reporting system,” he said.
The BoI leverages a global network of partners to stay at the forefront of sustainable development.
In addition to its active role in the United Nations Global Compact, BoI is also a member of the UN Environment Programme Finance Initiative (UNEPFl) and a signatory to UNEP-FI’s Principles for Responsible Banking.