DBN Unveils $275m Climate Finance Fund for MSMEs

The Federal Government, through the Development Bank of Nigeria (DBN), has launched a $275m climate finance programme to support micro, small and medium-sized enterprises (MSMEs) investing in renewable energy, climate-resilient agriculture and other environmentally sustainable business activities.

The initiative, known as the DBN Enterprise Lending for Transition and Adaptation (DELTA) Programme, was unveiled on the sidelines of the 31st United Nations Climate Change Conference (COP31) in Antalya, Türkiye.

It is designed to address financing challenges preventing small businesses from adopting climate-friendly technologies and strengthening their resilience to extreme weather conditions.

The programme is expected to mobilise affordable, long-term financing, including a $100m contribution from the Green Climate Fund. It is also projected to benefit approximately 1.3 million people and reduce greenhouse gas emissions by an estimated 4.5 million tonnes of carbon dioxide equivalent.

Speaking at the launch, DBN Managing Director and Chief Executive Officer, Tony Okpanachi, said the initiative represented an expansion of the bank's mandate to address financing gaps facing Nigerian businesses, particularly those operating in underserved sectors.

He explained that climate change was already affecting Nigerian enterprises through unpredictable weather conditions, disruptions to production and supply chains, as well as rising energy costs.

According to him, the programme would enable businesses to invest in cleaner energy, improve agricultural resilience, reduce operating expenses and strengthen their competitiveness.

Okpanachi said the facility would combine lending, risk-sharing arrangements and technical assistance to address barriers discouraging financial institutions from supporting climate-related investments.

He identified high initial investment costs, collateral requirements, inadequate loan tenors, limited project preparation capacity and perceived investment risks as major obstacles to accessing climate finance.

He cited the possibility of helping food processing businesses replace expensive diesel generators with solar power and supporting agricultural enterprises to adopt efficient irrigation systems to manage unpredictable rainfall.

Representing the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, the Deputy Director, IERD, Federal Ministry of Finance, Abubakar Matazu, described climate change as an economic and development challenge requiring substantial private-sector investment.

He said Nigeria could not rely solely on public resources to finance its climate transition, stressing the importance of attracting concessional funding, guarantees and private capital.

Matazu said the Federal Government remained committed to creating the fiscal, policy and institutional environment required to mobilise climate finance and improve access to funding for businesses.

Also speaking, the Head of Climate Finance at the National Council on Climate Change, Benny Ejiofor, said the programme would make climate financing more accessible to small businesses rather than concentrating opportunities among large corporations.

He urged financial institutions to expand green lending and encouraged MSMEs to incorporate climate considerations into their operations.

The Director of Climate Change, Rural Development and Infrastructure Division at GIZ, Alexander Haack, said the organisation would provide technical assistance to complement the financing facility, including strengthening the capacity of businesses and financial institutions to develop viable projects.

He disclosed that GIZ's agricultural finance programme had facilitated more than €57m in private financing for farmers in rural communities.

Meanwhile, DBN Executive Director and Chief Financial Officer, Ijeoma Ozulumba, expressed confidence that the programme would attract additional development partners, noting that the bank already had a pipeline of prospective projects.

She said the expectation was to achieve substantial deployment of the facility before the next climate conference.

The initiative comes amid growing pressure on Nigerian businesses to manage climate-related disruptions, rising energy costs and vulnerabilities in agricultural production.

For small enterprises dependent on diesel-powered generators and weather-sensitive agricultural activities, access to affordable long-term financing is expected to support the transition towards cleaner energy and more resilient operations.