The Securities and Exchange Commission (SEC) has emphasised the need for the mobilisation of capital markets to bridge the colossal financing gap for climate adaptation in Africa.

In a statement on Sunday in Lagos, Emomotimi Agama, the director-general of SEC, was quoted to have stated this while speaking on “The Role of Capital Markets in Closing Financing Gaps for Climate Adaptation” at the just concluded African Development Bank (AfDB) annual general meeting.

Mr Agama urged project developers and private sector actors to present bankable, pipeline-ready projects with robust environmental and social metrics, to aid in closing financing gaps for climate adaptation.

He explained that African capital markets could achieve this through 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.

“By integrating our markets, aligning standards, adopting the ISSB framework, and mobilising institutional capital across borders, we can build a climate-resilient future for all Africans,” he said.

Mr Agama noted that Africa, which contributed less than four per cent of global greenhouse gas emissions, bore over 25 per cent of climate-related losses.

“Experts estimate our continent faces an annual climate adaptation financing shortfall of up to 100 billion dollars by 2030.

“The 2022 Africa Economic Outlook by the AfDB estimated that the continent needs around 500 billion dollars of climate finance by 2030.

“Africa will also need to invest more than three trillion dollars in mitigation and adaptation by 2030 in order to implement its Nationally Determined Contributions.

“These figures are more than statistics, they translate into lost livelihoods in the Sahel, vanishing fish stocks in the Gulf of Guinea, and more frequent flooding in Lagos and Nairobi,” he said.

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.

Mr Agama added that the 2023 United Nations Environment Programme Adaptation Gap Report said Africa needed between 212 billion dollars and 387 billion dollars 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 said.

Mr Agama explained that in 2017, Nigeria launched its sovereign green bond, the first in sub-Saharan Africa.

He said within months, it was oversubscribed by 2.5 times, driven by Nigerian pension funds and diaspora investors seeking both yield and impact.

This, he said, demonstrated that local institutional capital could be mobilised for climate projects when the right instruments and confidence-building frameworks are in place.

Mr Agama noted that the ISSB standards served as the game-changer as the experiences in Nigeria for example, were not only innovating climate finance products but also shaping global standards for sustainability disclosures.

He said: “The Securities and Exchange Commission (SEC) Nigeria represents the country on the International Sustainability Standards Board’s Adoption Readiness Working Group (ARWG), which was tasked with implementing the new IFRS S1 & S2 Sustainability Disclosure Standards.

“The ARWG finalised its Roadmap for Adoption, 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.”

Mr Agama noted that adaptation finance was critically underserved due to three major reasons namely 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 said.

To scale adaptation finance, the SEC DG urged deeper regional market integration, harmonised ESG standards, and 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 mobilising institutional capital across borders, we can build a climate-resilient future for all Africans.

“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” he said. 

(NAN)