• Wednesday, July 17, 2024
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Africa needs Green Banks to bridge climate finance gaps – Experts

NGO, Catholic parish pilots faith for climate action initiative

Experts say climate financing from African Green Banks is needed to bridge investment gaps in green projects on the continent.

Green Banks are mission-driven institutions that use innovative financing to accelerate the transition to clean energy and fight climate change.

During an African Development Bank (AFDB) event held on the sidelines of the Middle East and North Africa (MENA) Climate Week themed “A Green Finance Facilities Ecosystem: a $3tn opportunity for Africa,” oranised in partnership with the Islamic Development Bank, sought to proffer solutions to climate investment in the continent.

The event brought together climate finance experts to discuss how sustainable investments can benefit Africa and the Middle East, and North Africa.

Rania Al-Mashat, Egyptian Minister of International Cooperation, said the creation of green funds and green financing mechanisms is critical for financing green projects in Africa.

“We need the government, the Multilateral Development Banks (MDBs), the local financial institutions and actors to work together to drive sustainable initiatives,” Al-Mashatsaid.

The Egyptian government, she claims, is creating an enabling environment and strategically aligning its policies with the needs of the private sector.

“Ahead of COP27, Egypt is preparing a guidebook to help Governments, Multilateral Development Banks and the private sector engage in the mobilization of climate finance.”

Read also: Green Climate Fund approves $194m financing for Nigeria, 12 others

Furthermore, Gareth Phillips, manager of Climate and Environment Finance at the AFDB, who moderated the discussion, said, “Green Banks or Green Financial Facilities have the potential to increase African countries’ capacity to access and mobilize climate finance to support the implementation of their Nationally Determined Contributions (NDCs) and related national climate and development goals.”

“They design and fund a pipeline of local bankable sustainable projects by strategically using limited public funds to mobilize much larger private investments.”
Phillips also stated that the African Development Bank has begun planning for the launch of the African Green Finance Facility Fund next year (AG3F).

The AG3F, according to him, is expected to provide technical assistance grants to help local governments and financial institutions design green finance facilities and develop pipelines of sustainable, green “Paris aligned” projects; capitalize on green financing facilities; and co-finance project pipelines by providing concessional resources and de-risking mechanisms to allow private investors to participate in green transactions.

Panelists further expressed consensus on the need to build local capacity to develop sustainable projects, structure blended financing to improve access to capital and engage more effectively with the private sector.
“Mainstreaming the Green Bank Model presents a broad opportunity to fill the climate and environment finance gap for Africa,” Audrey-Cynthia Yamadjako, trust fund manager and coordinator of the Green Bank Initiative at the African Development Bank, said.

“MDBs and International Financial Institutions have a crucial role to play in capacitating local financial institutions to develop local green pipeline of projects and ease their access to the resources they may need to support a sustainable, decarbonized development and prosperity in Africa.”
Climate finance experts from both multilateral development banks, the Nordic Development Fund, and Pollination Group, a climate change investment and advisory firm, also attended the event.

In another sphere, the Government of the United Arab Emirates hosted the first-ever Middle East and North Africa Climate Week, co-organized by the United Nations Climate Change Secretariat, United Nations Development Program, United Nations Environment Program, the World Bank Group, and MENA-based partners.