Economy
Crowding Private Sector Into Africa’s Climate Action
By Financial Nigeria
The global community for climate action was spooked by the November 8 election of Donald Trump as the next President of the United States.
The US President-elect had earned the sobriquet of “climate denier,” for his claim that climate change is a hoax.
However, there is cautious optimism that his presidency will not overturn the global agenda on climate change.
Hopefully, his views on climate change will change and align with reality when he settles into the Oval Office. Policymakers also believe that global climate agreements cannot be reversed easily.
In the meantime, stakeholders are pressing on with formulating strategies for climate change mitigation and adaptation.
The 22nd session of the Conference of the Parties (COP 22) to the United Nations’ agency on climate change held on November 7 – 18 in Marrakech, Morocco.
At the climate talks, Australia, Japan, United Kingdom, Pakistan and seven other countries ratified the December 2015 Paris Climate Agreement. A total of 111 countries, including the United States, China and Member Countries of the European Union ratified the agreement by the time COP 22 concluded.
Since the Paris accord entered into force on November 4th, quite earlier than anticipated, global action against climate change has effectively shifted to strategic programming. Therefore, in Marrakech, Canada, Germany, Mexico and the United States published their plans to significantly decarbonize their economies by 2050. A group of 47 developing nations also committed to running entirely on renewable energy sources “as rapidly as possible.”
Some of the plans are already gaining traction. Investments in renewable energy totalled $286 billion in 2015. This surpassed by 3% the previous high of renewable energy investment achieved in 2011. Data gleaned from Global Trends in Renewable Energy Investment 2016, a joint publication by United Nations Environment Programme and Bloomberg, further revealed that last year, coal and gas-fired electricity generation drew less than half the record investment made in solar, wind and other renewable energy sources.
The trend in renewable energy investment is a mixed bag, even in developing countries. China alone accounted for 55% of total investment last year; Africa’s share was less than 5%. As climate change mitigation is being driven by investment in green energy, Africa is already taking the familiar position at the back seat on the ‘green energy train’.
This was not unanticipated by climate policymakers. Although China is the clear leader in investment in renewables, other developing countries, in particular the low-income countries, are not expected to be able to keep pace without international assistance. But the advanced countries appear to be reneging on their pledges to help finance both mitigation and adaptation frameworks in the developing world, including Africa. This generated some rumblings in Marrakech, with regard to the commitment by the developed countries to raise $100 billion annually by 2020 to support climate actions in developing countries.
Disappointing as this is, the prospects of improvement in international assistance at the required scale are not assuring. One, virtually all the advanced countries have been bedevilled by over half a decade of weak economic growth. This has put investment in infrastructure below ideal levels, suggesting near-term pressure on the fiscal regimes to close the infrastructure gap, create domestic jobs, and boost economic growth.
Two, the economic malaise is also driving populist nationalistic sentiments in Europe and the United States. The backlashes for the emerging isolationist regimes are expected to include decline in international trade, further political uncertainties, shrinking and closed borders, and volatility in financial markets – acting together to further put downward pressure on economic growth and constrict foreign aid.
Three, the developing world has ceased to be monolithic. A handful of the countries have recently made significant economic and financial advances. These countries, including the BRICS economies, and the countries of the Gulf States that have amassed huge reserve savings, are expected to underline their climate strategies by investment. The less fortunate countries will continue to rely on overseas development assistance, although the gap between pledges and delivery will continue to widen. Without a united front, commitment to pledges for climate change mitigation and adaptation will continue to slack, with consequences for vulnerable populations.
Africa that is left behind in the transition to the green economy will be worse off than it is today. As the drive towards decarbonisation gathers pace, Africa’s oil economies will face more intense fiscal challenges.
Given the strong link between government balance sheets and private sector balance sheets, this will result in serious constraint for business growth and profit. Therefore, it is in the enlightened self-interest of African private sector to begin to mobilise investment capital for Africa’s climate action.
For starters, the private sector is best suited to take the lead role in innovating climate solutions and green development. In Africa, the frontiers for the innovations are in power and agriculture. These are sectors that have been far less developed, compared to services sectors.
Happily, countries including Nigeria have recently enacted reforms in both their power and agriculture sectors. These reforms are geared towards mobilising private sector resources, having relaxed statist control and incentivised investment.
Accordingly, the private sector can leverage reforms that have relaxed the centralisation of the power grid to innovate and finance off-grid electricity solutions. Opportunities for Public Private Partnerships are also opening up as subnational governments are seeking to accelerate improvement in the power sector. These are happening in the region that is well endowed with solar energy and wind resources.
Similarly, various reforms in the agriculture sector have factored the need for climate resilience in national food security policies. But there is significant knowledge gap in Africa’s agriculture which cannot be left to the smallholder farmers and governments to fill. Private investments across the agriculture value-chain are needed to help close the knowledge gap and support adaptation mechanisms in rural farming communities.
Token actions towards building the green economy cannot remain an option for Africa’s private sector. The risks are dangerously stacked. Without adequate climate action, African farmers could lose between 40 percent and 80 percent of their croplands for growing grains. Also, the effects of biodiversity loss and ecosystem degradation are dire for even urban populations.
But the question remains: how will private sector resources be mobilised? No doubt, significant capacity lies with the African financial institutions, including the development finance banks and to a lesser extent the export credit agencies. But there has been risk aversion and shortage of risk-sharing market instruments. In the Nigerian banking industry, for example, aversion towards risk in agribusiness has hampered funding by financial institutions. And funding pooled at the instance of Central Bank of Nigeria for on-lending to agro-SMEs has historically under-performed. A further drag is the macroeconomic conditions, which are driving interest rates more and more beyond the affordability of agro-entrepreneurs and smallholder farmers.
To unlock private sector funding, therefore, the blockades at both demand and supply sides of the credit market have to be addressed by smarter policies and more faithfulness with implementation. But this will not be enough. There has to be a framework for sharing expertise on the continent. The good news is that such frameworks that pool resources, help to mitigate risk, and share knowledge in mobilising climate actions already exist. At the supra-national level, the African Risk Capacity (ARC) was founded in 2012 as an agency of the African Union with the mandate to finance climate resilience and crisis response.
In line with its mandate, the ARC is planning to roll out an Extreme Climate Facility, which will issue multi-peril, climate change catastrophe bonds. The securitization instruments will bring scale and knowhow to Africa’s climate risk management and climate change adaptation efforts, with tremendous benefits to the agriculture sector. XCF’s catastrophe bonds are expected to attract not only investment from indigenous African banks but also from international financial institutions. One hopes that the XCF will soon be deployed, and the rigorous risk modelling it plans to have in place will serve other market initiatives.
Necessary as it is for Africa to take responsibility for its resilience to climate change and to develop its adaptation mechanisms, the continent should not be denied ‘climate justice.’ The heavily-industrialised countries account for overwhelming proportions of the emissions that are heating the planet and are intensifying climate risks for vulnerable populations in less-industrialised developing countries. This makes the delivery of aid towards adaptation in developing countries quite mandatory. Foreign aid is also required to catalyse market frameworks in developing countries, and secure part of the moral planks on which the much-celebrated Paris accord rest.
By Adedapo Adesanya
The chairman of the Nigeria Revenue Service (NRS), Mr Zacch Adedeji, has urged the country to broaden its export basket beyond raw materials by embracing ideas, innovation and the production of more value-added and complex products
Mr Adedeji said this during the maiden distinguished personality lecture of the Faculty of Administration, Obafemi Awolowo University (OAU), Ile-Ife, Osun State, on Thursday.
The NRS chairman, in the lecture entitled From Potential to Prosperity: Export-led Economy, revealed that Nigeria experienced stagnation in its export drive over three decades, from 1998 to 2023, and added only six new products to its export basket during that period.
He stressed the need to rethink growth through the lens of complexity by not just producing more of the same stuff, lamenting that Nigeria possesses a high-tech oil sector and a low-productivity informal sector, as well as lacking “the vibrant, labour-absorbing industrial base that serves as a bridge to higher complexity,” he said in a statement by his special adviser on Media, Dare Adekanmbi.
Mr Adedeji urged Nigeria to learn from the world by comparative studies of success and failure, such as Vietnam, Bangladesh, Indonesia, South Africa, and Brazil.
“We are not just looking at numbers in a vacuum; we are looking at the strategic choices made by nations like Vietnam, Indonesia, Bangladesh, Brazil, and South Africa over the same twenty-five-year period. While there are many ways to underperform, the path to success is remarkably consistent: it is defined by a clear strategy to build economic complexity.
“When we put these stories together, the divergence is clear. Vietnam used global trade to build a resilient, complex economy, while the others remained dependent on natural resources or a single low-tech niche.
“There are three big lessons here for us in Nigeria as we think about our roadmap. First, avoiding the resource curse is necessary, but it is not enough. You need a proactive strategy to build productive capabilities,” he stated, adding that for Nigeria, which is at an even earlier stage of development and even less diversified than these nations, the warning is stark.
“Relying solely on our natural endowments isn’t just a path to stagnation; it’s a path to regression. The global economy increasingly rewards knowledge and complexity, not just what you can dig out of the ground. If we want to move from potential to prosperity, we must stop being just a source of raw materials and start being a source of ideas, innovation, and complex products,” the taxman stated.
He added that President Bola Tinubu has already begun the difficult work of rebuilding the economy, building collective knowledge to innovate, produce, and build a resilient economy.
By Adedapo Adesanya
President Bola Tinubu on Thursday inaugurated Nigeria’s National Halal Economy Strategy to tap into the $7.7 trillion global halal market and diversify its economy.
President Tinubu, while inaugurating the strategy, called for disciplined, inclusive, and measurable action for the strategy to deliver jobs and shared prosperity across the country.
Represented by Vice-President Kashim Shettima, he described the unveiling of the strategy as a signal of Nigeria’s readiness to join the world in grabbing a huge chunk of the global halal economy already embraced by leading nations.
“As well as to clearly define the nation’s direction within the market, is expected to add an estimated $1.5 billion to the nation’s Gross Domestic Product (GDP) by 2027. It is with this sense of responsibility that I formally unveil the Nigeria National Halal Economy Strategy.
“This document is a declaration of our promise to meet global standards with Nigerian capacity and to convert opportunity into lasting economic value. What follows must be action that is disciplined, inclusive, and measurable, so that this Strategy delivers jobs, exports, and shared prosperity across our nation.
“It is going to be chaired by the supremely competent Minister of Industry, Trade and Investment.”
The president explained that the halal-compliant food exports, developing pharmaceutical and cosmetic value chains would position Nigeria as a halal-friendly tourism destination, and mobilising ethical finance at scale,” by 2030.
“The cumulative efforts “are projected to unlock over twelve billion dollars in economic value.
“While strengthening food security, deepening industrial capacity, and creating opportunities for small-and-medium-sized enterprises across our states,” he added.
Allaying concerns by those linking the halal with religious affiliation, President Tinubu pointed out that the global halal economy had since outgrown parochial interpretations.
“It is no longer defined solely by faith, but by trust, through systems that emphasise quality, traceability, safety, and ethical production. These principles resonate far beyond any single community.
“They speak to consumers, investors, and trading partners who increasingly demand certainty in how goods are produced, financed, and delivered. It is within this broader understanding that Nigeria now positions itself.”
Tinubu said many advanced Western economies had since “recognised the commercial and ethical appeal of the halal economy and have integrated it into their export and quality-assurance systems.”
President Tinubu listed developed countries, including the United Kingdom, France, Germany, the Netherlands, the United States, Canada, Australia, and New Zealand.
“They are currently among the “leading producers, certifiers, and exporters of halal food, pharmaceuticals, cosmetics, and financial products.”
He stated that what these developed nations had experienced is a confirmation of a simple truth, that “the halal economy is a global market framework rooted in standards, safety, and consumer trust, not geography or belief.”
The president explained that the Nigeria national halal economy strategy is the result of careful study and sober reflection.
He added that it was inspired by the commitment of his administration of “to diversify exports, attract foreign direct investment, and create sustainable jobs across the federation.
“It is also the product of deliberate partnership, developed with the Halal Products Development Company, a subsidiary of the Saudi Public Investment Fund.
“And Dar Al Halal Group Nigeria, with technical backing from institutions such as the Islamic Development Bank and the Arab Bank for Economic Development in Africa.”
The Minister of Industry, Trade and Investment, Mrs Jumoke Oduwole, said the inauguration of the strategy was a public-private collaboration that has involved extensive interaction with stakeholders.
Mrs Oduwole, who is the Chairperson, National Halal Strategy Committee, said that the private sector led the charge in ensuring that it is a whole-of-government and whole-of-country intervention.
The minister stressed that what the Halal strategy had done for Nigeria “is to position us among countries that export Halal-certified goods across the world.
The minister said, “We are going to leverage the African Continental Free Trade Area (AfCFTA) to ensure that we export our Halal-friendly goods to the rest of Africa and beyond to any willing markets; participation is voluntary. “
She assured that as the Chairperson, her ministry would deliver on the objectives of the strategy for the prosperity of the nation.
The Chairman of Dar Al-Halal Group Nigeria L.td, Mr Muhammadu Dikko-Ladan, explained that the Halal Product Development Company collaborated with the group in developing the strategy.
“In addition to the strategy, an export programme is underway involving the Ministry of Trade and Investment, through which Nigerian companies can be onboarded into the Saudi Arabian market and beyond.£
Mr Dikko-Ladan described the Strategy as a landmark opportunity for Nigeria, as it creates market access and attracts foreign direct investment.
By Adedapo Adesanya
GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a 100 per cent guarantee to support a $75 million debt facility for Robust International Pte Ltd (Robust) to construct a new cashew nut processing plant in Ogun State, Nigeria.
GuarantCo, under the PIDG is funded by the United Kingdom, the Netherlands, Switzerland, Australia, Sweden and Canada, mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower-income countries across Africa and Asia.
Nigeria is one of Africa’s largest cashew producers of 300,000 tonnes of raw cashew nuts annually, yet currently less than 10 per cent are processed domestically. Most raw nuts are exported unprocessed to Asian and other countries, forfeiting up to 80 per cent of their potential export value and adding exposure to foreign exchange fluctuations.
According to GuarantCo, this additional plant will more than double Robust’s existing cashew processing capacity from 100 metric tonnes per day to 220 metric tonnes per day to help reduce this structural gap.
The new plant will be of extensive benefit to the local economy, with the procurement of cashew nuts from around 10,000 primarily low-income smallholder farmers.
There is an expected increase in export revenue of up to $335 million and procurement from the local supply chain over the lifetime of the guarantee.
Furthermore, the new plant will incorporate functionality to convert waste by-products into value-added biomass and biofuel inputs to enhance the environmental impact of the transaction.
It is anticipated that up to 900 jobs will be created, with as many as 78 per cent to be held by women. Robust also has a target to gradually increase the share of procurement from women farmers, from 15 per cent to 25 per cent by 2028, as it reaches new regions in Nigeria and extends its ongoing gender-responsive outreach programme for farmers.
Terms of the deal showed that the debt facility was provided by a Symbiotics-arranged bond platform, which in turn issued notes with the benefit of the GuarantCo guarantee. These notes have been subscribed to in full by M&G Investments. The transaction was executed in record time due to the successful replication of two recent transactions in Côte d’Ivoire and Senegal, again in collaboration with M&G Investments and Symbiotics.
Speaking on the development, the British Deputy High Commissioner, Mr Jonny Baxter, said: “The UK is proud to support innovative financing that mobilises private capital into Nigeria’s productive economy through UK-backed institutions such as PIDG. By backing investment into local processing and value addition, this transaction supports jobs, exports and more resilient agricultural supply chains. Complementing this, through the UK-Nigeria Enhanced Trade and Investment Partnerships and the Developing Countries Trading Scheme, the UK is supporting Nigerian businesses to scale exports to the UK and beyond, demonstrating how UK-backed partnerships help firms grow and compete internationally.”
Mr Dave Chalila, Head of Africa and Middle East Investments at GuarantCo, said: “This transaction marks GuarantCo’s third collaboration with M&G Investments and Symbiotics, emphasising our efforts to bring replicability to everything we do so that we accelerate socio-economic development where it matters most. The transaction is consistent with PIDG’s mandate to mobilise private capital into high-impact, underfinanced sectors. In this case, crowding in institutional investors in the African agri-processing value chain.
“As with the two recent similarly structured transactions, funding is channelled through the Symbiotics institutional investor platform, with the notes externally rated by Fitch and benefiting from a rating uplift due to the GuarantCo guarantee.”
Adding his input, Mr Vishanth Narayan, Group Executive Director at Robust International Group, said: “As a global leader in agricultural commodities, Robust International remains steadfast in its commitment to building resilient, ethical and value-adding supply chains across origin and destination markets. This transaction represents an important step in advancing our long-term strategy of strengthening processing capabilities, deepening engagement with farmers and enhancing local value addition in the regions where we operate. Through sustained investment, disciplined execution and decades of operating experience, we continue to focus on delivering reliable, high-quality products while fostering inclusive and sustainable economic growth.”
For Ms María Redondo, director at M&G Investments, “The guarantee gives us the assurance to invest in hard currency, emerging market debt, while supporting Robust’s new cashew processing plant in Nigeria. It’s a clear example of how smart credit enhancement can unlock institutional capital for high-impact development and manage currency and credit risks effectively. This is another strong step in channelling institutional capital into meaningful, on‑the‑ground growth.”
Also, Ms Valeria Berzunza, Structuring & Arranging at Symbiotics, said: “We are pleased to continue our collaboration with M&G Investments, GuarantCo, and now with Robust through a transaction with a strong social and gender focus, demonstrating that well-structured products can boost commercially attractive, viable, and impactful investments.”
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