SEC tasks Capital Markets to tackle Africa’s climate adaptation finance deficit
The Securities and Exchange Commission (SEC) has called for urgent mobilisation of African capital markets to address the continent’s vast financing shortfall for climate adaptation initiatives.
Speaking in Lagos during the recently concluded African Development Bank (AfDB) Annual General Meeting, the Director-General of the SEC, Dr Emomotimi Agama, made this appeal in a presentation titled “The Role of Capital Markets in Closing Financing Gaps for Climate Adaptation.”
Dr Agama encouraged project developers and private sector players to present bankable, investment-ready projects that include robust environmental and social metrics, arguing that such efforts would contribute meaningfully to narrowing the region’s climate finance gap.
He explained that African capital markets could rise to the challenge through greater regional integration, consistent alignment of standards, and the adoption of the International Sustainability Standards Board (ISSB) framework.
“Closing the climate adaptation financing gap in Africa is not a distant aspiration but a development imperative,” Agama said.
“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 stressed that although Africa contributes less than four per cent of global greenhouse gas emissions, the continent bears over 25 per cent of climate-related losses.
Quoting figures from the 2022 Africa Economic Outlook published by the AfDB, Agama pointed out that the continent faces an annual climate adaptation financing shortfall of up to 100 billion dollars by 2030.
He added that Africa would require approximately 500 billion dollars in total climate finance by that same year and more than three trillion dollars in mitigation and adaptation funding to implement its Nationally Determined Contributions (NDCs).
“These numbers are not just abstract statistics. They represent real consequences—lost livelihoods in the Sahel, disappearing fish stocks in the Gulf of Guinea, and increasingly frequent flooding in cities like Lagos and Nairobi,” he said.
Agama warned that these figures underscored the deepening divide between vulnerability and resilience across the continent.
“The reality is stark. Despite contributing minimally to global emissions, Africa is experiencing severe climate impacts, from punishing droughts that threaten food security, to rising sea levels eroding coastlines, and increasingly violent storms disrupting lives and economies,” he said.
Citing the 2023 United Nations Environment Programme Adaptation Gap Report, Agama noted that developing countries may require between 212 billion and 387 billion dollars annually for adaptation by 2030. For Africa specifically, current flows and commitments are said to fall far short, with the shortfall estimated to be as much as 50 times current funding levels.
He recalled Nigeria’s experience with its 2017 sovereign green bond, the first of its kind in sub-Saharan Africa, which was oversubscribed by 2.5 times within months. According to him, strong interest from pension funds and diaspora investors demonstrated that local institutional capital could be effectively mobilised for climate-focused projects, provided suitable instruments and confidence-building frameworks are in place.
Agama referred to the ISSB Standards as a potential turning point for climate finance. He noted that Nigeria, through the SEC, is playing an active role in shaping the global sustainability disclosure landscape.
“The SEC represents Nigeria on the International Sustainability Standards Board’s Adoption Readiness Working Group (ARWG), tasked with rolling out the new IFRS S1 and S2 Sustainability Disclosure Standards,” he said.
He added that the ARWG’s adoption roadmap was made publicly available by the Financial Reporting Council of Nigeria and SEC Nigeria between 3 February and 14 March 2024. All feedback received was rigorously reviewed and incorporated.
The roadmap, he explained, sets out a phased approach: early adoption, voluntary adoption between 1 January 2024 and 31 December 2026, and mandatory adoption starting 1 January 2027. All entities, excluding government bodies, must comply according to the outlined timelines.
“This leadership places Nigeria at the forefront of transparent, comparable, and decision-useful sustainability reporting in Africa,” Agama said.
He identified three major obstacles to scaling adaptation finance: misperceptions about the sector, gaps in data and measurement, and general risk aversion among investors. “This is where our capital markets must intervene, and where the ISSB framework becomes indispensable,” he noted.
To address these challenges, the SEC boss advocated for deeper regional market integration, harmonised ESG standards, and the use of tools such as credit enhancements to reduce the risk associated with early-stage climate investments.
He concluded, “The recent progress in Nigeria proves that it can be done. 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.”