Global development financiers present at the Organization of Petroleum Exporting Countries (OPEC) Fund event this year in Vienna, Austria, have pledged a strong commitment to remodel their investments to support green projects at scale.
Representatives of multilateral development banks and intergovernmental organizations noted that business and political leaders need to do more to encourage private sector capital deployment.
Chairman of the Islamic Development Bank Group, Muhammad Al Jasser, cited the Desert-to-Power flagship renewable energy initiative led by the African Development Bank as “a great pioneering project.”
Al Jasser said the Islamic Development Bank is fully committed to financing green projects while balancing it with support for poverty reduction.
Akinwumi Adesina, President of the African Development Bank Group, urged for innovative approaches to project planning and project de-risking in order to increase private sector participation for sustainable development.
“We’ve got where the private sector is. We’ve got US$ 145 trillion of assets under management (and) by 2026 it’s going to be there. But the issue here is that, we need new ways of aggregation to prepare the projects, to de-risk the projects and lower the transaction cost for those deploying capital.”
Akinwumi Adesina
Mr. Adesina cited the Africa Investment Forum initiated by the Bank and seven partners as a leading continental platform that is aggregating bankable projects to reduce fragmentation and make it easier to attract institutional investments.
“The Africa Investment Forum has become today the premier investment platform to do anything on investment in Africa, and in the last four years, we have been able to leverage about US$ 142 billion of investment interest into energy, water and sanitation, infrastructure, and transport corridors.”
Akinwumi Adesina
He further disclosed that the African Development Bank and its partners are also creating opportunities for the private sector to invest in agriculture through special agro-industrial processing zones, which are being established across the continent.
“We are bringing in private capital into agriculture that will create opportunities for the private sector to go into rural areas, close to where the farmers are producing – they can buy food, they can process food, they can package food, they can export food and have a greater competitiveness for various value chains.”
Akinwumi Adesina
A Call For Consensus In Redefining Development Finance
The Chief Executive Officer of Frenche de Développement, Rémy Rioux urged for agreement on a new definition of development funding.
“We need a new narrative. We need to work on a framework to finance what nobody is financing the most vulnerable communities. This is our core mandate, and we must be allowed to allocate part of the precious concessional resources to mobilize, to lower emissions, to go the private way.”
Rémy Rioux
In order to lay out a plan for reducing the debt load of low-income nations while making more money available for climate financing, Rioux said he was looking forward to this week’s meeting for a New Global Financing Pact.
According to Rioux, the Paris discussions will include the reallocation of International Monetary Fund special drawings rights (SDRs) to acknowledging Adesina’s advocacy for the African Development Bank to be the conduit for redeploying the SDRs to Africa.
Frannie Leautier, expert chair of the Independent Review of Multilateral Development Banks’ Capital Adequacy Frameworks, outlined areas that her committee identified to maximize the impact of their capital.
She cited these areas as including recognizing callable capital as a powerful instrument of shareholders’ commitment; adopting more financial innovations in capital deployment; enhancing dialogue with credit agencies; and undertaking reforms to enhance transparency.
Bhutan’s Prime Minister, Lotay Tshering praised multilateral development banks for their assistance, especially for poor and vulnerable nations.
“You are the group of people working beyond avenues for profit. You embrace countries beyond that of your own.”
Lotay Tshering
Abdulhamid Alkhalifa, director general of the OPEC Fund, emphasized the necessity for development financiers to restructure their businesses in order to draw in additional funding in order to close the enormous financing deficit.
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