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AFD and the fight against climate change in Nigeria

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Intervention context

Nigeria, country of over 170 million inhabitants, is the largest economy in Africa.

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Context
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Intervention Strategy

Since 2008 AFD operates in Nigeria to support the country's development policy.

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Strategy
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Supported projects

From agriculture to urban development AFD finances and supports projects in various development sectors of the country.

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Projects

News

Toward the end of gas flaring in Nigeria?

17/05/2017

Reducing gas flaring is a major climate and energy challenge for Nigeria. Today, more than 350 billion cubic feet of gas are flared annually, equivalent to Nigeria's electricity production. Beyond the economic aspect, flaring is the cause of more than 15% of the country's greenhouse gas emissions.

Gas flaring; a hazardous practice and energy waste

Gas flaring entails burning the gas which escapes from the oil well during the exploration of the petrol. This is a very common practice in Nigeria. Exploiting gas, which is lower in quantity than petrol, would amount to making heavy investments for the oil companies. This is why they flare it, thus destroying millions of cubic meters of gas: an energy waste.  

These combustions are accompanied by carbon dioxide emissions: heavy environmental impact (air, water, land pollution) and population health consequences (lung problems).  

Changing the practice in Nigeria

 

Since the 2015 climate conference, AFD proposed to accompany Nigeria in the implementation of its INDC (Intended Nationally Determined Contribution), particularly in reducing gas flaring by 2030.  

Following the Abuja gas marketing conference of December 2016, organized jointly by the Federal Ministry of Petroleum Resources and the World Bank, AFD mobilized a six-month resident expertise mission whose terms of reference were to support the initiative launched by the Ministry and to identify projects that could be supported financially. A first report presenting the analytical work and financial tracks has been submitted to the Federal Ministry of Petroleum Resources and to the donors working in the field.  

Reducing carbon footprint while contributing to economic development

Reducing gas flaring is one of the most ambitious climate targets of the Nigerian government and is expected to reduce annual CO2 emissions by about 64 million tonnes (Mt) by 2030 for a current carbon footprint of 450 Mt per year.

Beyond a reduction in the carbon footprint of the oil industry, the commercialization of the gas currently being flared could contribute to the Nigerian economy: the 350 billion cubic feet per year (12% Gas production) could thus double Nigerian electricity production and improve access to energy by more than 6 million households thanks to Liquefied Petroleum Gas.  

Developing domestic gas use through new technical solutions

The development of the domestic gas market is hindered by two main obstacles:

·         lack of the existing pipeline system, which is both dilapidated, incomplete and regularly subject to acts of sabotage;

·         And the weakness of the electricity sector, which is the main domestic market.

The reduced size and isolation of a large number of flaring sites also makes commercial operation of the flared gas difficult.  

To meet these challenges and develop the domestic gas market, in line with government objectives, the AFD Group could provide financial support for projects facilitating the marketing of flared gas using new technologies, such as compressed natural gas (CNG) , the mini-LNG (liquefied natural gas) or the gas to liquids (GTL). These technologies could also encourage new uses for gas and promote energy efficiency both in the production of electricity for industry or the use of cleaner fuels for cooking.



Private sector at the bedside of health

07/04/2017

Access to healthcare – and to high-quality care – is a challenge for a large section of the population in Sub-Saharan Africa. It is often small private structures which meet needs in rural areas and for the poorest. The Medical Credit Fund foundation works alongside them and demonstrates that in the health sector, it is possible to effectively combine a social purpose with entrepreneurial projects.

Sub-Saharan Africa has 16% of the world’s population, but only accounts for 2% of global health expenditure. Yet over the years, population growth, the rise in chronic diseases, but also socioeconomic progress, have created an increasingly pressing demand for healthcare. But the African subcontinent suffers from a clear lack of investment.

In this extremely tense context, some 50% of total healthcare delivery is already provided by the private sector, which plays a key role at all levels, from healthcare provision to retail trade. It even has a predominant place in certain countries, such as Uganda or Ghana, with over 60% of total healthcare provision. “Contrary to common belief, the private sector is sometimes the only healthcare provider in rural areas and deprived urban areas”, explains Aurore Lambert, health project manager at AFD. “It is a far cry from provision just for rich people!”.
 

These structures are often small or medium-sized, yet they face two major problems which are intrinsically linked: the poor quality of healthcare and the difficulty of gaining access to financing to allow investments to address this. In reality, the banking sector generally considers that their activities are risky.
 

 

Some 600 health centers financed

Medical Credit Fund (MCF) is a foundation whose purpose is precisely to facilitate financing for these structures, while helping to improve their quality standards. The foundation is based in the Netherlands and is, for the time being, the only one of its kind. Since it was set up 5 years ago, MCF has financed 586 health centers, mainly in Kenya and Ghana, but also in Nigeria and Tanzania.

The average loan amount stands at EUR 20,000 and loans are mainly used to renovate buildings or purchase equipment. For example, a few months ago, South B Hospital, a small hospital structure with 45 beds located in a popular neighborhood of Nairobi, benefited from a loan to finance the creation of intensive care, nephrology and hemodialysis units. The hospital teams will follow a healthcare quality improvement program throughout the duration of the loan.

 

Photo Dorte Hopmans © Diorte

 

MCF is a not-for-profit foundation, but it is also a private actor: MCF does not allocate grants, but aims to grow in order to achieve financial equilibrium. Equilibrium ensures that the project is autonomous and gains in strength. “It is a social business”, explains Selvan Pajaniradja, who develops this sector of operations at AFD, “The aim is indeed to build high-quality health service provision for all at an affordable price. MCF consequently works for development, but at the same time generates the revenue which is essential for the sustainability of the project!”.

 

French-speaking Africa for tomorrow?

The originality of MCF can be seen in its inclusive and partnership-based method. The foundation works with local financial institutions, providing them with its knowledge of the health sector and assisting them in the appraisal and follow-up of files. “The aim is to work with local partners and help them develop their range of loans for the sector”, adds Aurore Lambert, “It involves showing that financing health services in Africa can be a profitable activity.” 

As the MCF project fits in with its core objectives for health and social business, in December 2016, AFD decided to take part in a funding round, via a EUR 3m concessional loan and EUR 1m grant from its social business facility. It has thereby joined up with the International Finance Corporation (IFC) and Calvert Foundation . AFD’s long-term objective is to help MCF establish itself in French-speaking Africa, in particular in Côte d’Ivoire, Cameroon and Senegal, where there are also considerable needs. “Given its expertise in the health and financial sectors in a number of countries”, points out Arjan Poels, Chief Executive Officer of MCF, “AFD is a key partner in supporting our project to improve the financing capacity of health structures and, more generally, healthcare quality in Africa.”
 



Governor of Ondo State visits AFD

06/04/2017

On Tuesday, 4th April, the Governor of Ondo State, Arakunrin Oluwarotimi Akeredolu paid a visit to the AFD Country Office in Abuja, to discuss the priorities of his newly elected Government and potential Partnerships with AFD.

Ondo State, located in the southwest of the country, has 3.5 million inhabitants and has many natural resources, including oil.  

This year, Ondo State is expected to benefit from a sovereign loan of USD 57 million from AFD through a loan to be on-lent by the federal government to finance a project to provide drinking water to its capital, Akure.

 

Working session between the Ondo Governor's team and the AFD Abuja © Ondo State Government / Nguher Zaki

The Governor also places at the top of his priorities agriculture and youth employment, particularly through support to local entrepreneurship, two themes that also lie at the heart of AFD's strategy in the country.  

The Director of AFD in Nigeria, Olivier Delefosse, promised to visit Akure before the end of the year in order to further explore possible collaborations between the AFD and Ondo State.



More effort in the power sector: AFD Abuja goes on field visit

20/02/2017

On the 3rd and 4th February, 2017, AFD and Transmission Company of Nigeria (TCN), visited the Kainji hydropower plant and power substation as well as  part of the Kainji-Birnin Kebbi line. With a question in mind: how can the distribution of electricity in Nigeria be improved?

How can the gap in the Nigerian power sector be breach?  

With 177 million inhabitants, Nigeria constitutes a huge market of potential consumers of electricity.

However, the country is facing a major energy deficit: the electricity capacity actually available on the grid is between 4000 and 4500 MW, while demand is at least twice as high! This is partly due to the obsolescence of equipment and infrastructures for the generation, transmission and distribution of electricity

Result? Very high overall losses, estimated at over 40% and nearly 60% of the population deprived of electricity.

A worrying situation that motivated an AFD’s field visit, in order to study the possibilities of intervening in the sector.  

Strengthening AFD support to the power sector

The visit was part of an identification mission from the AFD headquarters to strengthen power transmission infrastructure in northwestern Nigeria.  

The Kainji power station is the third hydroelectric dam in Nigeria after Shiroro (600 MW) and Jebba (570 MW). With a capacity of about 450 MW, it is also one of the oldest in the country.

AFD plans to provide support through a reinforcement of capacities for distribution and evacuation of electricity generated.  

Supporting the entire chain to achieve the SDGs  

Since 2011, AFD provides support to all levels of the Nigerian power sector: from transmission to distribution, through vocational training, for a cumulative amount of more than 325 million USD. It, therefore, intends to support Nigeria in achieving Sustainable Development Goal SDGs N° 7, which aims to ensure that everyone has access to reliable, sustainable and modern power services at an affordable cost.  

Find out more about our projects in the power sector.



Inauguration of new Country office and 75th anniversary: AFD celebrates in Abuja!

25/01/2017

On 19th January, 2017, AFD inaugurated its new country office in Abuja in the presence of the Honourable Minister of Finance and the French Ambassador to Nigeria. This was also an occasion to mark its 75 years of existence through a photo exhibition.

The Honourable Minister of Finance, the Deputy Head of the Sub-Saharan Africa Department of AFD and the French Ambassador to Nigeria celebrated the 75th Anniversary of the AFD and recalled the eight years of the Agency's existence in Nigeria.

Since its creation in 1941 by General de Gaulle, the AFD Group finances development projects in more than 90 countries in four continents. AFD has been operating in Nigeria since 2008 and has committed more than 1bn € in various projects for urban infrastructure (transport, water, solid waste management), agriculture, SME, Power and food security.  

Permanent Secretary of the Federal Ministry of Finance commenting on the Lagos State Bus Rapid Transit Project, co-financed by AFD © Deji Akinpelu

During the occasion, guests were able to learn more about the history of the group through a short film projection depicting the main highpoints of the Institution, and were also able to discover the main projects supported by AFD in Nigeria through a photo exhibition.  

The Honourable Minister of Finance, Mrs. Kemi Adeosun siezed the opportunity to express her sincere gratitude to the Agency for its development activities so far in Nigeria. A few minutes earlier, in the presence of some "happy few", she inaugurated the new country office of AFD in Abuja, located at Charles de Gaulle Street: a good omen for the future!



 
 
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