To promote resilient growth: An African Green Bank is born

2023-05-05 10:32:12

For its pilot phase, the Green Bank initiative will be supported by the African Green Finance Facility Fund (AG3F) which aims to mobilize $10 million for technical assistance, of which $1.6 million has already been secured. .

The African Development Bank has launched the African Green Bank Initiative to address key barriers to climate finance in Africa and promote resilient, green and sustainable growth.

The Green Bank initiative will be supported by the African Green Finance Facility Fund (AG3F), which aims to develop an ecosystem of local and regional green finance facilities to mobilize private investment in support of the transition climatic. AG3F promotes the deployment of the Green Bank model across the continent.

To ensure rapid deployment, AG3F will collaborate with existing local financial institutions and leverage their network, funding capacity and experienced staff.

Needs investment estimated at 2,800 billion dollars by 2030

Contributors will be donor countries, multilateral development banks, development finance institutions (DFIs), climate funds, and philanthropic or impact investors. The first beneficiaries are the National Investment Bank of Côte d’Ivoire and the Caisse des dépôts et consignations du Benin, which will develop pipelines of clean energy, resilient infrastructure or smart agriculture projects. Audrey-Cynthia Yamadjako, coordinator of the AG3F Green Bank initiative, welcomed the project partners: “We are delighted to start working with our partners in the pilot phase of the AG3F. We will benefit from their technical knowledge, their investment vehicles and their financing capacity to create the first African green financing facilities”. Green finance facilities will support small and medium-sized enterprises (SMEs) and local communities by providing direct access to climate finance. The initiative will help African countries implement Nationally Determined Contributions (NDCs), given that investment needs are estimated at $2.8 trillion by 2030 and funds invested on the continent represent still a limited share of global green finance flows.

AG3F will benefit from best practices and the support of strategic partners for the creation, financing and deployment of green banks. These partners have established an international reputation in the field of climate finance and include the leading European asset manager Amundi, the knowledge platform Green Bank Network, the main multilateral fund Climate Investment Funds (CIF) and the Canadian project Climate Action. in Africa.

According to Solomon Quaynor, the African Development Bank’s Vice President for Private Sector, Infrastructure and Industrialization, “Technical assistance will improve the management and governance of green projects of green finance facilities and is therefore essential to attract private capital by building long-term investor confidence”. Technical assistance will be needed to create green finance facilities and build their technical capacity, including by implementing monitoring, risk assessment and reporting tools and structuring a pipeline of bankable green projects.

Develop a green reserve

During the launch of the African Green Bank initiative at the United Nations Conference on Climate Change (COP27) in Egypt in November 2022, the African Development Bank’s Vice President for Energy, Power, Climate and Green Growth, Kevin Kariuki, highlighted the initiative as a milestone key to achieving the Sharm el-Sheikh implementation plan.

“The Green Bank initiative is a powerful tool to reduce financing costs and mobilize private sector investment in climate action in Africa,” Kariuki said.

He added that multilateral development banks and international financial institutions had a crucial role to play in enabling local financial institutions to develop a green pipeline of sustainable and “Paris-aligned” projects.

This initiative is part of the African Finance Alliance on Climate Change (Afac). Akinwumi Adesina, President of the African Development Bank Group, explained in the framework of Afac that the mobilization of the financial sector will be essential to fight once morest climate change in Africa: “African financial actors must work together creatively. to mobilize global financial resources that can support local innovation and that promote climate-resilient and low-carbon development on the continent”.

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