Green Banks have a critical role to play in overcoming climate finance gaps. This was the message relayed at an African Development Bank event held on the sidelines of the Middle East and North Africa Climate Week.
Organised in partnership with the Islamic Development Bank, A Green Finance Facilities Ecosystem: a $3tn opportunity for Africa brought together climate finance experts from both multilateral development banks, the Nordic Development Fund and climate change investment advisory firm Pollination Group to share perspectives on how sustainable investments represent an opportunity for Africa and the MENA region.
Dr Rania Al-Mashat, Egyptian Minister of International Cooperation said the creation of green funds and green financing mechanisms is key for financing green projects in Africa. “We need the government, the MDBs, the local financial institutions and actors to work together to drive sustainable initiatives”.
The AfDB has begun preparing for next year’s launch of the African Green Finance Facility Fund (AG3F). AG3F 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;
• capitalise 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.
Gareth Phillips, AfDB Manager of Climate and Environment Finance: “Green Banks or Green Financial Facilities have the potential to increase the capacity of African countries to access and mobilise climate finance to support the implementation of their 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 mobilise much larger private investments.”
Panellists also 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.
Egypt, which will host COP27 in November 2022, is expected to serve as a role model for other countries in the region. The Egyptian government 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 mobilisation of climate finance.
“Mainstreaming the Green Bank Model presents a broad opportunity to fill the climate and environment finance gap for Africa. MDBs and International Financial Institutions have a crucial role to play in capacitating local financial institutions to develop a local green pipeline of projects and ease their access to the resources they may need to support a sustainable, decarbonised development and prosperity in Africa,” said Mrs Audrey-Cynthia Yamadjako, trust fund manager and coordinator of the AfDB’s Green Bank Initiative.
The Government of the United Arab Emirates hosted the Middle East and North Africa Climate Week, co-organiz\sed by the United Nations Climate Change Secretariat, United Nations Development Program, United Nations Environment Program, the World Bank Group and MENA-based partners.