African Development Bank and other African financiers are helping to catalyze climate action and green growth by identifying global macroeconomic challenges.
The AfDB has greater involvement of the private sector is crucial to closing the gap in climate finance flows into Africa, which until recently, was dominated by non-private actors.
For example, of the $29.5 billion invested in African climate finance in 2020, only 14% was from private actors.
This is significantly lower than comparable regions such as Latin America and the Caribbean (49%), East Asia and the Pacific (39%) and South Asia (37%).
Besides, these limited funds covered a small number of African countries with relatively developed financial markets, such as South Africa, Nigeria, Kenya, Morocco, and Egypt, which alone attracted $4.2 billion.
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It is the reason the Bank Group has made mobilizing private sector financing for climate and green growth the centerpiece of its 2023 Annual Meetings scheduled for 22-26 May in Sharm El Sheikh, Egypt.
The meetings will discuss successful strategies to galvanize more resources, including within Africa, and investment opportunities in renewable energy and sustainable agriculture.
The bank’s governors, representing its shareholders, will be joined by global experts and development financiers to discuss the matter of a new architecture for mobilizing resources for sustainable investment in Africa.
This will include how to make African countries’ rich natural capital to finance climate and green growth. About a dozen heads of state and government are expected to attend.
The African Development Bank believes there is much potential for climate finance in Africa to increase. The bank bases its view on a dataset of global private resources. Private equity funds under management reached a record $6.3 trillion in 2021, while global pension fund assets in the 22 largest markets hit a new high of $56.6 trillion by late 2022.
To combat climate change and support green growth, African countries need more climate investments to achieve their national targets for emissions reductions and adaptation to the impacts of climate change.
