Signing of a Loan Agreement for the “Climate Change Measures Support Project” in Nigeria (Private Sector Investment Finance): Supporting the climate change measures through first loan transaction with a commercial financial institution in the Sub-Saharan African region.
On November 15, 2023, the Japan International Cooperation Agency (JICA) signed a loan agreement of up to US$ 75 million with Access Bank Plc. (Access Bank) of the Federal Republic of Nigeria to support climate change measures in the country, and held a ceremony on February 5, 2024 to commemorate the signing. The project will be implemented with the United States International Development Finance Corporation (USDFC) and Citigroup as co-financiers (Note). In addition, the project is JICA's first private sector investment finance in the banking sector in Sub-Saharan African region.
The Government of Nigeria signed the Paris Agreement in 2016, ratifying it the following year, and set out its targets to reduce greenhouse gas (GHG) emissions, which requires the estimated investment amount of USD 177 billion between 2021 and 2030. In order to achieve this ambitious goal, the government has been tackling climate change through such initiatives as promoting the involvement of the private sector in the agenda.
However, the goal will not be met by public investments alone, and will require assistance from development agencies as well as the use of private sector funds and investments. Within this context, the Nigerian government has a policy of mobilizing a wide range of private sector funds for climate change action, from both domestic and international sources, in order to promote climate change measures projects, with a focus on the agriculture and energy sectors.
From left to right: attendees from the U.S. Embassy, Citigroup, Access Bank, Embassy of Japan and JICA
The borrower, Access Bank, is the largest commercial bank in Nigeria and has developed environmental guidelines based on international standards. The bank facilitates the financing of climate change measures through its extensive network of the country’s foremost private sector companies, using funds raised by an issuance of green bonds to finance projects that contribute to GHG reduction. Within this loan project, JICA's contribution is expected to be used for renewable-energy and energy-saving projects in Nigeria, as well as for agricultural projects that contribute to climate change measures.
By providing Access Bank with funding, this project aims to finance private companies that are engaged in renewable-energy and energy-saving projects in Nigeria, as well as agriculture-related projects that contribute to climate change measures, and thereby to support the promotion of climate change mitigation and adaptation in the country. The project is also expected to contribute to SDGs (Sustainable Development Goals) Goals 2 (Zero hunger), 7 (Affordable and clean energy), 13 (Climate action), and 17 (Partnerships for the goals).
In addition, the project is also in line with the Facility for Accelerating Climate Change rEsilient and Sustainable Society (ACCESS) and the Facility for Supporting Agricultural supply chain and Food security Enhancement (SAFE), the establishment of which Prime Minister Kishida Fumio of Japan announced at the Partnership for Global Infrastructure and Investment, a side event of the G7 Summit, in Hiroshima in May 2023.
The use of proceeds of the loan provided by the USDFC and Citigroup are not limited to projects that contribute to climate change measures but are expected to be used to finance a wide range of sub-projects by micro -, small and medium-sized enterprises.