Bank of Industry and French Development Agency launch €100m green finance credit line

NIGERIA'S Bank of Industry (BoI) and the French Development Agency (AFD) have teamed up to built a partnership that will provide a €100m credit line for the expansion of green finance across the country.

A signatory to the 2015 Paris climate Change Agreement, Nigeria is committed to reducing greenhouse gases and this involves moving away from polluting fossil fuels to clean energy. To address both problems simultaneously, Nigeria needs to step up the production of clean energy but the country is lagging far behind the rest of the world with initiatives like solar farms, wind farms and generating power from waste.

To help offer funding for green initiatives, this latest arrangement was approved by the AFD under its Transforming Financial Systems for Climate (TFSC) programme with the Green Climate Fund (GCF). The TFSC is a $650m programme developed in 17 countries for 100% climate investment projects.

This 10-year facility is attractively priced at 2.47% per annum with a four year moratorium by mixing various concessional resources. The credit facility will focus on financing investments that contribute to climate change mitigation or adaptation, specifically projects focused on renewable energy, low carbon and efficient energy generation, climate smart agriculture technologies, clean urban transportation and others.

BoI managing director Olukayode Pitan, said: “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.”

At the signing ceremony at the BoI head office in Lagos, AFD's Nigeria country director Xavier Muron, highlighted the importance of such a project in the framework of the fight against climate change globally. He added that this new credit line is a key milestone towards the achievement of the Paris Agreement and is timely since Nigeria is looking forward to launching its Energy Transition Plan.

Mr Muron said: “The financing package will also include a €2.5m grant facility 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 effective identification and development of eligible 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. BoI operates under a robust Environment and Social Governance framework that has been integrated into its operations with a monitoring and reporting system."