SEC Tasks African Capital Markets on Climate Finance
By Patience Ikpeme
The Securities and Exchange Commission (SEC), Nigeria, has stressed the crucial need to mobilize capital markets to bridge the enormous financing gap for climate adaptation across Africa.
Dr. Emomotimi Agama, the Director-General of SEC, made this call while speaking on “The Role of Capital Markets in Closing Financing Gaps for Climate Adaptation” during the African Development Bank (AfDB) meeting. He urged project developers and private sector entities to present bankable, pipeline-ready projects that feature robust environmental and social metrics to help close these critical financing gaps for climate adaptation.
Dr. Agama explained that African capital markets could achieve this through greater market integration, aligning standards, and adopting the International Sustainability Standards Board (ISSB) framework. “Closing the climate adaptation financing gap in Africa is not a distant aspiration but a development imperative, and one that demands our collective ingenuity and capital,” he stated. “By integrating our markets, aligning standards, adopting the ISSB framework, and mobilizing institutional capital across borders, we can build a climate-resilient future for all Africans,” Agama added.
He pointed out the disproportionate burden Africa faces regarding climate change. Despite contributing less than four percent of global greenhouse gas emissions, the continent bears over 25 percent of climate-related losses. Experts estimate that Africa faces an annual climate adaptation financing shortfall of up to $100 billion by 2030. The 2022 Africa Economic Outlook by the AfDB estimated that the continent needs around $500 billion of climate finance by 2030. Furthermore, Africa will need to invest more than three trillion dollars in mitigation and adaptation by 2030 to implement its Nationally Determined Contributions.
“These figures are more than statistics,” Dr. Agama stated, “they translate into lost livelihoods in the Sahel, vanishing fish stocks in the Gulf of Guinea, and more frequent flooding in Lagos and Nairobi.” According to him, these figures reflect a deepening divide between vulnerability and resilience. “The stark reality is undeniable. Africa, contributing minimally to historical emissions, faces severe impacts of a changing climate which includes devastating droughts threatening food security, rising sea levels, engulfing coastlines, and intensifying storms disrupting lives and economies,” he said.
Dr. Agama also mentioned that the 2023 United Nations Environment Programme Adaptation Gap Report indicates Africa needs between $212 billion and $387 billion annually for developing countries’ adaptation by 2030. “Meanwhile, our current flows and commitments are a mere fraction of this amount. For Africa specifically, the gap is immense, estimated to be up to 50 times current funding levels,” he conveyed.
He cited Nigeria’s launch of its sovereign green bond in 2017, the first in sub-Saharan Africa, as a success story. Within months, it was oversubscribed by 2.5 times, driven by Nigerian pension funds and diaspora investors seeking both yield and impact. This, he explained, demonstrated that local institutional capital can be mobilized for climate projects when the right instruments and confidence-building frameworks are in place.
The SEC boss posited that the ISSB Standards serve as a game-changer, as Nigeria’s experiences are not only innovating climate finance products but also shaping global standards for sustainability disclosures. He noted that the Securities and Exchange Commission (SEC) Nigeria represents the country on the International Sustainability Standards Board’s Adoption Readiness Working Group (ARWG), which is tasked with implementing the new IFRS S1 & S2 Sustainability Disclosure Standards.
The ARWG finalized its Roadmap for Adoption, which was publicly exposed by the Financial Reporting Council of Nigeria and SEC Nigeria between February 3 and March 14, 2024. Feedback was rigorously reviewed and integrated. The roadmap outlines early Adoption, Voluntary Adoption (January 1, 2024, through December 31, 2026), and Mandatory Adoption (beginning January 1, 2027). All entities, excluding government bodies, must comply with staggered timelines. This leadership positions Nigeria at the forefront of transparent, comparable, and decision-useful sustainability reporting across Africa.
Dr. Agama observed that adaptation finance is critically underserved due to three major reasons: a perception problem, data and measurement gaps, and risk aversion. “This is where our capital markets must step in, and where the ISSB becomes vital,” he asserted.
To scale adaptation finance, the SEC DG urged deeper regional market integration, harmonized Environmental, Social, and Governance (ESG) standards, and the deployment of tools like credit enhancements to de-risk early-stage climate investments.
“Closing the climate adaptation financing gap in Africa is not a distant aspiration but a development imperative, and one that demands our collective ingenuity and capital. The recent journey in Nigeria proves that it can be done. By integrating our markets, aligning standards, adopting the ISSB framework, and mobilizing institutional capital across borders, we can build a climate-resilient future for all Africans,” he concluded. “Let us seize this moment, as regulators, investors, governments, standard-setters, and development partners, to deepen African capital markets and finance the resilience of our continent and our people.”
