The African Development Bank (AfDB) has disclosed that Green banks are part of bridging climate finance gaps, especially in Africa.
“The world’s $50 trillion investment fund industry, especially funds with a sustainability focus, can play an essential role in financing the transition to a greener economy and helping to avoid some of the most perilous effects of climate change, according to a recent analysis from the Global Financial Stability Report.
Participants of the African Development Bank event held at the Middle East and North Africa Climate Week (MENA) sidelines reflected that all green banks are to be involved to plug the gap in climate-smart finance.
Organized 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 Pollination Group, a climate change investment and advisory firm, to share perspectives on how sustainable investments represent an opportunity for Africa and the MENA region.
At the event, Dr. Rania A. Al-Mashat, the 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”.
Egypt will host COP27 in November 2022 and 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 mobilizing climate finance.
Gareth Phillips, Manager of Climate and Environment Finance at the African Development Bank, who moderated the discussion, said Green Banks have the potential to increase Africa’s access to climate finance.
“Green Banks or Green Financial Facilities have the potential to increase the capacity of African countries to access and mobilize climate finance to support the implementation of their NDCs and related national climate and development goals. They design and fund a local bankable sustainable projects pipeline by strategically using limited public funds to mobilize larger private investments.”
Gareth Phillips
Panelists expressed consensus on the need to build local capacity, 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 Africa’s climate and environment finance gap. 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, decarbonized development and prosperity in Africa,” said Mrs. Audrey-Cynthia Yamadjako, AfDB Trust Fund Manager and Coordinator of the Green Bank Initiative.
The African Development Bank has begun preparing to launch 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; 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.
The Government of the United Arab Emirates hosted the 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.
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