Fitch Ratings has warned that Nigerian banks face growing credit risks from climate change, driven by the country's heavy reliance on oil, gas, and agriculture. The rating agency says both transition risks from global decarbonisation policies and physical risks from extreme weather events could weaken loan portfolios and reduce collateral values over the coming decades. Nigeria's carbon pricing and carbon market frameworks, still under development, may also raise operating costs for carbon intensive businesses, with knock on effects for lenders. Fitch projects that Nigeria could record a combined climate risk score of 50 to 55 by 2050, placing it among the most vulnerable countries in Africa. The report urges banks to integrate climate risk into their lending and risk management frameworks, diversify sector exposure, and explore green finance products. The Central Bank of Nigeria is already developing frameworks for climate risk classification and disclosure, signaling that regulatory pressure will increase.
