Abuja: Dr. Dele Alake, the Minister of Solid Minerals Development, has affirmed that de-risking tools such as guarantees are essential for advancing climate adoption efforts and the economic transformation of nations, including Nigeria. Alake made these remarks during a high-level stakeholders’ roundtable on mainstreaming financial guarantees in Nigeria, organized by the Green Guarantee Group (GGG) in Abuja.
According to News Agency of Nigeria, guarantees are financial instruments that transfer specific risks from investors to guarantors. These tools are crucial for scaling private investment in climate action across Emerging Markets and Developing Economies (EMDEs). Alake highlighted the necessity of innovative financing mechanisms in sectors like renewable energy, mining, agriculture, infrastructure, and climate-resilient industries to mitigate risks and attract long-term investments.
The minister re-emphasized Nigeria’s commitment to crafting policies and institutional frameworks designed to draw private capital into key sectors of the economy. He stressed the importance of strategic collaboration among governments, development institutions, private investors, and international partners to bridge financing gaps, particularly in emerging economies.
Alake stated that the government is devoted to fortifying international partnerships and employing innovative financing mechanisms to unlock investments in green development. This initiative aims to support Small and Medium-Scale Enterprises and accelerate sustainable economic growth throughout Nigeria.
The workshop served as a valuable platform for discussions among policymakers, financial institutions, development partners, and private sector stakeholders to devise practical solutions to Nigeria’s financing challenges affecting development.
Mr. Lars-Hendrik Roeller, the Co-Chairman of the GGG, remarked that guarantees have globally emerged as vital instruments for reducing pricing risks, enhancing investor confidence, and unlocking private capital for climate and development projects. Roeller mentioned that the GGG aspires to establish a robust global guarantee architecture to support sustainable investments, especially in developing countries.
Furthermore, the German Ambassador to Nigeria, Annett Gnther, reiterated Germany’s commitment to deepening climate finance cooperation with Nigeria. This collaboration aims to unlock private investments and bolster sustainable development efforts. Gnther noted that guarantees have proven effective in reducing investment risks, potentially mobilizing up to six times more private financing than traditional development instruments.
Earlier, Faruk Yabo, Co-Chair of the GGG, explained that the GGG was created to tackle the persistent obstacles to climate and development finance. Yabo pointed out the significant gap between the global capital available and the volume that reaches bankable projects, particularly in markets like Nigeria. He emphasized that access to finance remains a major development barrier in Nigeria.
Yabo stated that the workshop’s objective was to cultivate a shared understanding among government, regulators, development finance institutions, domestic guarantee providers, and the private sector regarding the GGG and its recommendations. Additionally, the workshop aimed to explore strategic applications of guarantees tailored to Nigeria’s context.
The discussions focused on assessing Nigeria’s current position and testing approaches against real opportunities in sectors such as renewable energy, nature-based solutions, agricultural value chains, and the solid minerals sector. These sectors are intended to serve as case studies for guarantee mapping and dialogue.
NAN reports that the GGG was announced at COP28 and launched in March 2024, marking significant progress in the dialogue initiated by Germany and Nigeria to address challenges in utilizing guarantees for climate finance.