CBN's Cardoso Advocates Continental Climate Finance Alliance to Balance Growth and Decarbonisation
Central Bank of Nigeria Governor Olayemi Cardoso has called for a coordinated African approach to climate-smart finance, arguing the continent must simultaneously pursue industrialisation and climate resilience objectives.
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Central Bank of Nigeria Governor Olayemi Cardoso has urged African nations to establish a continental alliance on climate-smart finance, positioning coordinated monetary and fiscal frameworks as essential to reconciling the continent's development imperatives with global decarbonisation commitments.
Speaking at the Egypt 30by30 Programme organised by the Central Bank of Egypt, Cardoso outlined the structural challenge facing African policymakers: achieving industrialisation, job creation, and poverty reduction while building climate resilience and reducing carbon intensity. According to The Whistler, Cardoso stated that "Africa must grow, industrialise, create jobs, expand opportunities, and lift millions out of poverty, while also decarbonising and building climate resilience."
Financing Gap and Policy Coordination
The proposal for a continental climate finance alliance addresses a persistent capital allocation problem in African economies. Current climate finance flows to the continent remain substantially below requirements outlined in nationally determined contributions (NDCs) under the Paris Agreement. The African Development Bank estimates the continent requires approximately $277 billion annually between 2020 and 2030 for climate adaptation and mitigation, yet receives less than 12% of global climate finance despite hosting 17% of the world's population.
Cardoso's intervention comes as central banks globally reassess their role in climate risk management. The Network for Greening the Financial System (NGFS), which includes several African central banks, has developed frameworks for integrating climate-related financial risks into prudential supervision and monetary policy operations. A coordinated African approach could standardise climate risk disclosure requirements, establish common taxonomies for green assets, and create regional mechanisms for mobilising concessional climate capital.
Energy Transition and Monetary Policy Implications
The climate finance alliance concept carries significant implications for Africa's energy sector, where approximately 600 million people lack electricity access according to International Energy Agency data. Balancing energy access expansion—which historically has relied on fossil fuel infrastructure—with decarbonisation targets presents acute policy trade-offs for monetary authorities managing inflation, exchange rate stability, and financial system resilience.
Central banks across the continent have begun incorporating climate considerations into their operational frameworks. The South African Reserve Bank and Bank of Morocco have conducted climate stress tests on their banking sectors, while the Central Bank of Nigeria has issued sustainable finance principles. However, these initiatives remain fragmented, lacking the coordinated approach Cardoso advocates.
The Egypt 30by30 Programme, where Cardoso delivered his remarks, represents one model for climate-smart financial architecture. The initiative aims to mobilise private capital for renewable energy deployment through de-risking mechanisms and blended finance structures. Scaling such approaches continentally would require harmonised regulatory frameworks, standardised project preparation facilities, and coordinated engagement with multilateral development banks and climate funds.
Implementation Challenges and Capital Mobilisation
Operationalising a continental climate finance alliance faces substantial technical and political obstacles. African economies exhibit heterogeneous financial sector development, divergent monetary policy frameworks, and varying fiscal capacity. Currency volatility and sovereign credit constraints limit many countries' ability to issue green bonds or access international climate finance on commercial terms.
The alliance concept would need to address foreign exchange risk—a critical barrier to renewable energy investment given that equipment costs are dollar-denominated while revenue streams are typically in local currency. Coordinated central bank interventions, potentially through the African Export-Import Bank or African Development Bank, could provide hedging facilities or guarantee mechanisms to mitigate this risk.
Climate-smart finance also intersects with broader questions of industrial policy and resource allocation. Africa holds significant reserves of minerals critical to global energy transition—including cobalt, lithium, manganese, and rare earth elements. A coordinated financial approach could link mineral resource development to domestic value addition and renewable energy deployment, capturing greater economic value from the global transition.
As African nations prepare for COP30 negotiations and the replenishment of climate funds, Cardoso's call for continental coordination signals growing recognition that fragmented national approaches may prove insufficient. Whether monetary authorities can translate this vision into operational frameworks will substantially influence the continent's capacity to finance low-carbon development pathways while maintaining macroeconomic stability.