Green Banks have a critical role to play in overcoming climate finance gaps, participants of an African Development Bank event held on the side lines of Middle East and North Africa Climate Week.
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.
Also present was Dr Rania A. Al-Mashat, Egyptian Minister of International Cooperation, who 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, 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 mobilization of climate finance.
Gareth Phillips, Manager of Climate and Environment Finance at the African Development Bank, who moderated the discussion, said, “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 pipeline of local bankable sustainable projects by strategically using limited public funds to mobilize much larger private investments.”
The African Development Bank has begun preparing for the launch in the next year 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; capitalize 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 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 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 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, trust fund manager and coordinator of the Green Bank Initiative at the African Development Bank.
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.
The African Development Bank hosted four events during the meetings, three of them with the Islamic Development Bank.