Report: Nigeria Needs $283.3bn Investments to Transition to Net Zero

Eromosele Abiodun
A report by Standard Chartered Bank has revealed that Nigeria needs investment worth $283.3 billion to transition to net zero and meet long-term global warming targets.It also stated that emerging markets as a whole need to invest an additional $94.8 trillion, a sum higher than annual global gross domestic products (GDP).

This, according to the report titled, “Just in Time,” was on top of the capital already allocated by governments under their current climate policies.

Private investors, the report stated, could contribute $83 trillion of the $94.8 trillion that is required – underscoring the urgent need for financial institutions to fulfil green and transition finance pledges. The report, which looked at the transition-financing gap for emerging markets and how to close it, warned that Nigerian household spending could fall by a total $335.1 billion if the nation had to self-fund its journey to net-zero.

The report further stated that Nigeria would need assistance from developed markets to meet its goals. The study found that, “If the finance Nigeria needs to transition to net zero is provided by developed markets, Nigerian household spending could increase by $216.7 billion compared to self-financing. If emerging markets fund their own transition, without help from developed markets, household consumption in these markets could fall by five per cent on average each year.

”It added, “However, as shown in our previous report, “The $50 trillion Question,” encouraging investment in emerging markets is a difficult task. The world’s top 300 investment firms with total assets under management of more than $50 trillion, have just two per cent, three per cent and five per cent of their investments in the Middle East, Africa and South America, respectively.

“To transition in the fairest way possible, greater collaboration is required in strategy, policy, and financing.  More importantly, banks need to live up to the pledges made during COP26 if ordinary households are to avoid bearing the costs of their market’s transition to net-zero. ”The report looked at two pathways to closing the emerging market transition finance gap, self-financing by emerging markets and developed market financing, where capital is provided through grants and loans. 

“Emerging market self-financing would lead to higher taxes and an increase in government borrowing, meaning that some of the world’s poorest people will have less to spend on their everyday needs.“Households in these markets would be $2 trillion poorer on average each year.

In total, between now and 2060, emerging market household consumption could be reduced by $79.2 trillion.“However, developed market financing could see emerging market household spending increase by $1.7 trillion on average each year (compared to self-financing) and would also stimulate global growth – GDP could be $108.3 trillion higher cumulatively between now and 2060 if developed markets finance the transition.

Emerging markets being able to reach net-zero without hampering their growth or prosperity would represent a just transition, “it stated. Commenting, the Group Chief Executive, Standard Chartered, Bill Winters, said: “Emerging markets need a great deal of investment to transition to net zero and the stakes have never been higher. Without help from developed markets, improvement in emerging market prosperity could be halted or reversed, which would not only be unjust but would have a hugely negative impact on the world economy.”