DFCD continuation phase sets its sights on West Africa

Nigeria is the most populous African country (213.4 million in 2021) and one of the top ten most vulnerable to climate change, which is exposing tens of millions of people to climate and disaster risks.

According to a report by Africa Policy Research Institute, Climate change in Nigeria is most visible in the form of drought, flooding, sea level rise and erosion, resulting in damaging outcomes such as lower crop yields, food insecurity, and deepening poverty.

Ghana, on the other hand, has a lower population of 32.83 million (2021). Frequent floods make them highly vulnerable to climate change, which could result in serious humanitarian and economic effects if not addressed on time. According to a World Bank report, without prompt actions, higher temperatures and heat stress will affect crop and labour productivity, and more erratic rainfall patterns will damage buildings and infrastructure.

With the DFCD winding up phase one and gearing up to the continuation phase that will kick off in 2024 – 2027, it is hoped that the West Africa Region (an area of interest that did not pick up as expected due to several reasons including the challenging business environment in the SAHEL region driven by political instability and difficulty in finding sponsors that meet minimum requirements of FMO ticket sizes of (5 million euro), will be a centre of focus. The project initially focused on corporate companies but increased its scope last year to include aggregators (especially finance institutions), a strategy that will widen the possibilities in West Africa. 

Nigeria, one of the countries added to the SNV footprint in the last year, has a vibrant private sector full of innovation despite the challenges of insecurity and corruption often associated with the country, as Albert Bokkestijn (DFCD Project Manager) and Tigere Muzenda (Regional Investment Officer for DFCD Africa) found out when they visited the country in May 2023. They also visited Ghana, where a lot of private sector innovation is happening in SMEs (Small and Medium Enterprises). 

'Countries in the SAHEL region exist in a more difficult and challenging environment, but there are a lot of visible actions going on to support capacity building of the private sector that may create opportunities for the DFCD as well', Tigere Muzenda says.

In total, they held 18 meetings in Nigeria, of which 15 were with private sector players and three with SNV Nigeria office, EKN & EU Delegation. These were drawn from different sectors, including private sector companies, agriculture (farming), manufacturing of agri-foods, integrated farming and manufacturing/processing, financial services, and waste-to-energy industries.

Susan Essien, Country Deputy Director Nigeria, was optimistic about the visit and said, 'The private sector and climate change are at the heart of SNV country intervention strategy'.

In Ghana, they held ten meetings with the private sector players and the SNV Ghana office, EKN and EU Delegation. One workshop was organised with SMEs and smallholder farmers. Of the seven private sector entities met, 71% were financial institutions, which remains an encouraging perspective for the region.

Rueben Ottou, the business development officer from SNV Ghana, was optimistic about the project noting that the team in Ghana views DFCD as an important instrument to make a positive impact in the country.

'The investment appetite is no doubt a non-issue in these countries, but the challenge is more about the needs on the ground and the private sector initiatives that are already taking place that are near readiness for scaling up (especially in Nigeria) within the countries and across Africa', Albert noted.

The DFCD team aims to bring at least one or two origination project proposals for Nigeria to the Origination Facility-Investment Committee (IC) in August this year so that they can start project implementation in the last quarter of this year. They remain optimistic that Ghana will deliver its first project in the first quarter of 2024.

'Nigeria is definitely the place to be for the DFCD Phase two, and Ghana presents us with a worthy challenge to test further and roll out our DFCD aggregation strategy', Tigere concludes.