DBN unveils $275m climate finance fund for MSMEs

The Federal Government, through the Development Bank of Nigeria has launched a $275m climate finance programme to help micro, small and medium-sized enterprises invest in renewable energy, climate-resilient agriculture and other low-carbon business operations.

The initiative, known as the DBN Enterprise Lending for Transition and Adaptation Programme, is designed to address the financing challenges preventing small businesses from adopting climate-friendly technologies and strengthening their resilience to extreme weather conditions.

The programme, unveiled on the sidelines of the 31st United Nations Climate Change Conference in Türkiye, 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 on Friday, the Managing Director and Chief Executive Officer of DBN, Tony Okpanachi, said the initiative represented an expansion of the bank’s mandate to address the financing gap facing Nigerian businesses, particularly those operating in underserved sectors.

He said climate change had become an immediate economic threat to Nigerian enterprises, affecting production, supply chains and operating costs, while creating opportunities for businesses willing to invest in cleaner technologies.

He said, “Ladies and gentlemen, with a target size of $275 million, Delta will expand assets to finance for Nigerian MSMEs, investing in clean energy and climate resilient agriculture.

“In practical terms, this could mean enabling a full processor to replace costly diesel generation with solar power. It could mean helping an agricultural enterprise invest in efficient irrigation to manage increasingly unpredictable rainfall. Across thousands of businesses, investments such as this have the potential to translate climate finance into greater resilience, stronger productivity, and more sustainable growth.

“Since DBN was established in 2017, our mandate has been very, very clear to address Nigeria’s MSMEs financing gap, challenging capital for productive and underserved enterprises. Today, we are extending that mandate to one of the final challenges of our time, and that is in the area of climate change.

“For Nigerian businesses, climate change is not a distant mystery. It is already being felt through more unpredictable weather, pressure on Nigerian production and supply chains, and the rising cost of energy. But the transition also presents an opportunity. Businesses can invest in cleaner and more efficient energy, strengthen resilience of agricultural production, reduce operating costs, and become more competitive.”

Okpanachi explained that the facility would combine lending, risk-sharing arrangements and technical assistance to overcome the obstacles discouraging financial institutions from funding climate-related investments.

He identified high upfront investment costs, collateral constraints, inadequate loan tenors, limited project preparation capacity and the perceived risks associated with climate investments as some of the major barriers.

He said the programme would enable businesses to replace expensive diesel-powered electricity with solar energy and support agricultural enterprises to invest in efficient irrigation systems to cope with increasingly unpredictable rainfall.

“Through a combination of lending, risk sharing, and technical assistance, we intend to address some of the barriers that continue to hold back climate investment. High upfront costs, inadequate loan tenors, collateral constraints, limited project preparation capacity, and the risk perceived by financial institutions.

“But DELTA is not simply about creating a climate financing facility. It is about developing the market. We want to work with Nigerian financial institutions to expand their ability to identify and finance climate investments. We want to work with MSMEs and their associations to build a stronger pipeline of viable projects,” he said.

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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 depend solely on public resources to finance its climate transition, stressing the need to attract concessional funding, guarantees and private capital.

According to him, the Federal Government remains committed to providing the fiscal, policy and institutional environment required to mobilise climate finance and make funding accessible to businesses.

“The Delta Programme, valued at $275 million, aims to mobilise climate finance to expand access to affordable, long-term financing for MSMEs, supporting their transition to low-carbon operations and climate-resilient agriculture.

“Through climate finance, risk-sharing mechanisms and technical assistance, including a $100 million contribution from Green Climate Fund, the programme seeks to strengthen enterprise productivity, create economic opportunities to benefit approximately 1.3 million people and reduce emissions by an estimated 4.5 million tonnes of CO2 equivalent. Public resources alone cannot deliver the scale of investment required,” Matazu said.

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

He called on financial institutions to increase green lending and urged small businesses to incorporate climate considerations into their operations.

He said, “Today is not just another launch. Today we are opening a new door of opportunity for thousands of small businesses that power our economy. We all know that MSMEs are the backbone of Nigeria.

“They create jobs. They feed families. They drive innovation. But we also know that they are the most vulnerable to climate change, to floods, to droughts, to rising energy costs. And yet, they are also the solution.”

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 support, including strengthening the capacity of businesses and financial institutions to develop bankable projects.

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

Also speaking during a panel session to explain details of the fund, the Executive Director and Chief Financial Officer of DBN, Ijeoma Ozulumba, expressed confidence that the programme would attract additional 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 launch comes amid growing pressure on Nigerian businesses to contend with climate-related disruptions, rising energy expenses and vulnerabilities in agricultural production.

For small enterprises that depend heavily on diesel-powered generators and weather-sensitive agricultural activities, access to affordable financing remains a major consideration in adopting cleaner energy and climate-resilient technologies.