Mutualising Climate Finance Mechanisms Towards Sustainable Futures in Nigeria

Abstract

Nigeria’s path to net-zero emissions by 2060 requires approximately $29.7 billion annually, yet current domestic and international climate finance totals only $2.5 billion—a $27.2 billion annual shortfall. This paper analyzes the critical challenges hindering climate investment in Africa, including high perceived risks, debt sustainability crises, and bureaucratic bottlenecks. Through a review of current international and local funding mechanisms, the study advocates for the mutualization of climate finance. This approach moves beyond traditional donor-recipient models toward a systemic blending of capital that integrates climate action with national development goals. Key objectives include utilizing public funds as "first-loss" guarantees to attract private investment and establishing regional risk-pooling facilities to manage climate-related shocks. The paper concludes that mutualization is not merely a financial necessity but a strategic imperative to ensure transparency, accountability, and a sustainable future for Nigeria in an era of increasing climate volatility.