As climate concerns mount globally, a new chapter is unfolding in Nigeria - one where the country’s financial sector is stepping up to confront deforestation and its far-reaching implications.
On July 9-10th, 2025, the Food and Agriculture Organization of the United Nations (FAO), through the GEF-7 Food Systems, Land Use and Restoration (FOLUR) Impact Program in Nigeria, with support from UN-REDD, convened a two-day virtual workshop that brought together banks, policymakers, and technical experts to drive collective action for deforestation-free finance.
Participants included over 30 leaders from 7 Nigerian financial institutions – from the Central Bank of Nigeria, Bank of Agriculture, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Sterling Bank, Bank of Industry, Nigerian Agricultural Development Fund (NADF), and Advans Lafayette Microfinance Bank. These public and private financial institutions shared one ambition: to align Nigeria’s banking sector with emerging global sustainability standards while protecting national ecosystems and livelihoods.
The workshop spotlighted a growing awareness - deforestation is not just an environmental issue, but a financial one. Institutions face tangible risks: regulatory penalties, reputational damage, and loss of asset value as climate volatility increases.
Yet amid these risks lie immense opportunities. Nigeria’s Sustainable Banking Principles already provide a policy foundation, and stakeholders demonstrated a clear appetite for green investment strategies. From exclusion lists and ESG screening tools to tree-planting campaigns and sustainability-linked lending, Nigerian banks are starting to embed environmental responsibility into their core operations.
Participants drew inspiration from international models, including examples from Brazil and other countries, that leverage blended finance and structured investment mechanisms to incentivize deforestation-free production at scale.
In Nigeria, the path may be complex, and marked by challenges such as weak policy enforcement, limited data, insufficient finance, lack of awareness, and institutional capacity gaps, but the collective will to act was unmistakable.
Breakout groups provided space for stakeholders to co-create a roadmap forward for mainstreaming deforestation-free finance in Nigeria:
- In the short term actions, participants emphasized the need for targeted capacity development, including training on ESG integration and use of geospatial tools to monitor deforestation risks within portfolios. Establishing a multi-stakeholder platform was proposed to foster coordination and knowledge sharing across the sector.
- Medium-term recommendations included harmonizing regulatory frameworks to provide clear guidance for banks, alongside developing deforestation-free financial products that incentivize sustainable production systems across the financial supply chains, including through partnering with international development financial institutions (DFIs). Notably, scaling financial inclusion for smallholders and SMEs engaged in sustainable land use was emphasized as a strategic imperative.
- For the long term goals, participants envisioned a financial ecosystem where deforestation-free and ESG principles are fully integrated in banking standards, positioning Nigeria to comply with emerging global deforestation-free finance standards and benefit from green investment flows.
Stakeholders expressed strong interest in convening a national in-person forum to sustain momentum and refine implementing strategies for the identified roadmap. They also urged FAO and partners to support capacity development initiatives and development of operational tools and blended finance solutions that help banks de-risk sustainable land use investments.
‘As climate and deforestation risks evolve, Nigeria should continuously update its frameworks, adopt international best practices, and invest in the data/technology that underpin deforestation-free finance. Building a resilient agricultural sector will support both the economy and the forests for generations to come.”
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Dr Paul Oluikpe, Deputy Director of Central Bank of Nigeria
This workshop signals more than a policy milestone - it marks the beginning of a financial transformation in Nigeria. Redirecting capital flows away from deforestation-linked activities and toward sustainable production systems will be critical for achieving the country’s climate goals, protecting biodiversity, and strengthening rural livelihoods.
For FAO and the FOLUR Impact Program country project, this marks the beginning of deeper engagements with Nigeria’s financial sector to integrate deforestation-free finance across policy, institutional operations, and investment decisions. As these institutions take practical steps forward, the vision of a deforestation-free financial system in Nigeria is no longer a distant aspiration - it is a pathway actively being charted today.
