Nigeria is working to establish a national climate finance framework that could unlock up to $30 billion annually in adaptation investments for smallholder farmers, as experts push for targeted funding, transparent digital systems and stronger commercial lending.

The initiative aims to improve access to finance for millions of rural farmers facing climate-related threats, including recurring droughts in northern Nigeria and persistent flooding across southern agricultural regions.

Speaking at a Taxonomy Validation Workshop on Adaptation and Resilience Solutions, co-organised with YAPU Solutions, Dahiru Muhammed, Chairman of the Presidential Implementation Committee on Technology Transfer (PICTT), said a clearly defined framework would help attract foreign green capital.

He explained that the Federal Ministry of Finance and the United Nations Development Programme (UNDP) are leading the development of the broader national taxonomy, while PICTT and its technical partners are working to translate the framework into practical solutions for rural communities.

“Having a national taxonomy is good, but without defining which activity qualifies as adaptive or resilient to climate change, there is no way you can access the financing,” Muhammed said, noting that stakeholders are preparing to bring global funding partners into the initiative.

Muhammed also called for coordinated action by federal, state and local governments to tackle climate-related challenges, particularly flooding, through better infrastructure and effective mitigation measures.

Highlighting PICTT’s achievements, he pointed to its work in technology transfer, agricultural development and supporting entrepreneurs to turn research into commercially viable products.

Charles Nyangbe, Country Representative of WorldFish in Nigeria, said broad-based funding arrangements would not adequately address the different climate risks facing agricultural producers. He advocated region-specific financial instruments, including index-based insurance and blended finance models, to reduce lending risks.

“Government should come up with an envelope of funding that is targeted at climate financing, give it to financial institutions, give it to commercial banks so that they can lend,” Nyangbe said.

He proposed using public funds as credit guarantees to encourage commercial banks to increase lending to climate-vulnerable agricultural businesses.

Nyangbe further urged policymakers to broaden climate finance beyond crop production to include livestock, fisheries and aquaculture, sectors that also suffer significant damage from extreme weather events.

He said Nigeria had attracted about $2.5bn in climate-related financing, but the amount remained substantially below estimated funding requirements.

According to Nyangbe, climate finance discussions often concentrate too heavily on crop commodities despite the risks facing other agricultural activities. He cited flooding as a major threat to fish ponds and aquaculture facilities, where damage can result in considerable losses for farmers.

Christoph Junghleisch, Managing Director of YAPU Solutions, said climate adaptation represented an investment opportunity worth up to $30bn annually for smallholder farmers.

He disclosed that YAPU Solutions was working with PICTT to develop a framework linking climate adaptation solutions with suitable financing mechanisms.

The initial proposal could include a pilot project valued at between $100m and $200m, with plans to expand financing to $1bn during the first phase of expansion. Junghleisch clarified, however, that these figures were targets rather than confirmed funding commitments.

He identified digital technology as a key component of the proposed framework, explaining that it would help track funds reaching smallholder farmers, improve transparency and make financial transactions auditable.

“What we are focusing on is smart use of technology, optimisation of processes that enable you to document each and every cent, Naira, that you are basically bringing to the smallholder farmers,” he said.

Junghleisch added that YAPU Solutions was engaging development finance partners, including the Bank of Agriculture and the African Development Fund, while seeking to mobilise private-sector investment.

He emphasised that appropriate government policies, legislation and regulations would be necessary to support the initiative. However, he noted that public funding alone would not be sufficient to meet the scale of investment required.

Source: BusinessDay