Africa boasts abundant renewable energy resources, including sunlight, wind, hydro, and geothermal potential. These resources can play a vital role in both Africa’s sustainable development and the global transition to a low-carbon future. However, financial constraints and underinvestment have prevented many African countries from fully harnessing their renewable energy potential. African countries’ Nationally Determined Contributions (NDCs) between 2020 and 2030 demand an estimated US$2.8 trillion, surpassing 93% of Africa’s collective GDP. Despite governments pledging roughly 10% of this sum, there remains a significant funding gap, particularly in sectors like energy and transport. Chinese investors can bridge this gap by providing crucial funding, technology, and expertise to help African nations maximise their renewable energy potential.  

The Renewable Energy Briefing, titled “Green Horizons in 2024: Exploring Africa’s Renewable Energy Potential for Chinese Investors” has identified Zambia, Mozambique, Democratic Republic of Congo, Angola, and Uganda as the top five priority investment destinations for Chinese investors in Africa. It provides a data-driven analysis of each country’s renewable energy potential, regulatory landscape, existing infrastructure, and investment opportunities. Additionally, the briefing highlights the crucial role that Chinese companies can play in Africa’s renewable energy transition and will offer strategic recommendations for further investment.  

The selection of the top five countries was based on seven key criteria, including Total Climate Finance (TCF), Electricity Access (EA), Chinese Foreign Direct Investments (CFDI), Renewable Energy Capacity (2022), Deployment of Policies (DOP), Percentage of Renewable Energy Source (RES) in Total Electricity Generated, and Renewable Energy Potential (REP). These criteria were divided into two categories: those showcasing a need for investment and those highlighting potential, opportunities, capacity, and strong relationship with China.  

 Identified top five priority investment destinations 

The Renewable Energy Briefing aims to equip Chinese investors with the essential insights needed to navigate the renewable energy markets of these top-tier destinations successfully. By providing detailed and tailored investor briefings for each country, Development Reimagined is ensuring that Chinese investors have the information they need to make well-informed and successful investments in Africa’s green energy sector. 

For the next step, DR is planning to organise an investment tour in some of  the identified countries in September 2024. The tour will aim not only to visit the sites for potential investment opportunities but also to stir dialogue and brainstorm practical partnerships with African business leaders and government officials to deliver on renewable energy. 

Unlocking Renewable Energy Potential in Africa (2024): Who are Africa’s top 5 destinations for Chinese renewable investment? Find our briefs below.

Get access to our Introduction and Methodology here

Our Angola investment brief here

Our DRC investment brief here

Our Mozambique investment brief here

Our Uganda investment brief here

Our Zambia investment brief here

For more information about the Renewable Energy Briefing, please contact Climate Program Manager Ms. Yike FU at yikefu@developmentreimagined.com .  

29th February, 2024  

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Recognising this need, the Climate Action Tracker was conceived to provide a more nuanced and bespoke overview of Chinese climate action in Africa. It aims to: 

• Identify various project types, such as investments, constructions, equipment supply, and aid projects. 
• Set out distribution across countries and sectors in more detail. 
• Classify FOCAC commitments regarding completed projects or announcements of new projects. 
• Inform future FOCAC 9 discussions and prioritize countries and stakeholders for engagements. 

Tracker Overview  

The Climate Action Tracker is an Excel-based, searchable database covering China’s climate-related projects in African countries. The time range spans from November 2021, with regular updates leading up to FOCAC 9 in 2024. 

We define climate actions as all the business engagements from Chinese stakeholders to address and respond to climate changes in Africa, and the identified sectors are Renewable Energy, Clean Technology, Clean Transportation, and Climate-friendly Infrastructure.  

Major tracking sources include official press releases from stakeholders, industry websites (e.g., Belt and Road Project Portal, China International Contractors Association), and leading media outlets and databases globally. 

Apart from the projects deals already signed or under pipeline, there are also active engagements between Chinese and African stakeholders, which reveal a more promising future for the long term, which has also been tracked separately as “Climate Exchanges” 

Climate Actions in the Past 2 Years 

As of November 24, 2023, the Climate Action Tracker has identified 95 climate projects in Africa with Chinese participation. The data reflects clear evidence of acceleration, with ten projects in 2022 and a remarkable 85 projects in 2023.

What’s the Climate Projects About?  

• Renewable energy projects account for over half of the projects (55.32%), with climate-friendly infrastructure leading at 24.47%. 

• 27 projects have been completed, with others in the contract signing or construction phase. 

• 32 African countries are involved, with Western Africa, South Africa, and East Africa dominating. 
• Top destination countries include Nigeria (14), Kenya (8), and the DRC. 

The Role of Chinese Stakeholders  

• 75 out of 95 projects are delivered by EPCs. 
• 11 projects are financed by Chinese stakeholders, including development bank finance, enterprise investments, and government aid. 
• 6 involve equipment supply deals or donations, while 3 are technology transfer projects. 

Who Financed those Projects?  

Finance details are available for 66 out of 95 cases, revealing diverse funding sources. 

• 23 solely funded by Chinese entities. 
• 15 funded by African entities. 
• 19 involve contributions from multiple parties, including those that are co-invested by Chinese, African, and other development partners. 

“Climate Exchanges”: Unveiling the Next Steps of Climate Cooperation 

Beyond signed or pipeline deals, the data also highlights actively ongoing engagements between China and African stakeholders, indicating a promising future. High-level conferences or visits have predominantly facilitated agreements and MOUs, while there’s a rising trend in capacity building, both delivered by the Chinese public and private sectors. 

We invite you to explore the Climate Action Tracker, a tool that promises to enhance your insights into Chinese climate business engagements in Africa. This database offers a unique and detailed perspective, serving as an essential resource for stakeholders like yourself.   

Please fill out this short form to receive access to our Climate Action Tracker.  

Feel free to reach out if you have any questions or if you’d like further assistance in navigating the tracker: yikefu@developmentreimagined.com

February 5th 2024

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However, according to the data released in 2023 by Global Energy Monitor, current operating capacity of large utility-scale solar power in Africa is only 9478 megawatts (or, 9.4 gigawatts). This is only 1.7% of the global deployment of solar capacity. In comparison, for instance, China – a third the size of Africa, has close to 400GW of solar capacity, and Japan, 100 times smaller than Africa, has close to 80GW capacity. The UK – a little smaller than Japan – has 15GW capacity of solar, still more than the entire African continent.

In contrast, Africa as a continent – and indeed, most African countries – have a greater PV practical potential (4.51 kWh/kWp/day) than China (3.88 kWh/kWp/day), Japan, the UK, and the Global average (4.19 kWh/kWp/day).

Therefore, Africa is – in principle – the best frontier to develop more solar power energy.

So what is holding back solar from being deployed on the continent faster than in other regions? A lack of Finance? Africa Risk premiums? Our view, is it’s a combination of all.  And if the disparity is not addressed – for example through significant support to African countries to deploy the renewables targets – the new global target may serve to exacerbate the existing disparities.

Our infographic takes a closer look at the solar power landscape across diverse African countries and regions, showcasing the potential of solar power on the continent and illustrating the pivotal role of this source of clean energy in the global agenda.

Which parts of Africa exhibit the highest potential for solar power, and which countries on the continent are poised to experience more advancements in solar power capacity? Our data-driven infographic below answers these questions and more.

Average practical potential: Concerning the long-term photovoltaic power output, Northern and Southern African region have the greatest practical potential, while Central Africa ranks last. Namibia, Egypt, Lesotho, Libya, and Botswana are the top five countries in terms of average practical potential.

The operating solar farms: Northern Africa and Southern Africa have a clear lead in the operation of solar farm capacity. South Africa, Egypt, Morocco, Algeria, and Senegal are the top five countries concerning operating solar farm capacity.

The prospective capacity of solar farms: In terms of generation capacity, Northern Africa and Southern Africa are still top ranked. Egypt, Morocco, South Africa, Tunisia, and Algeria are the five countries with the largest improvement in solar farm capacity.

Check out the infographic below for more findings.

To find out how Development Reimagined can support you, your organisation, or Government, please email the team at clients@developmentreimagined.com.

Special thanks go to Lingqi Deng, Yunong Wu, Yike Fu for their work on the graphics and for collecting/analysing the underlying data and this accompanying article.

The data was collated primarily from a range of sources, including the Global Energy Monitor and World Bank data.

If you spot any gaps or have any enquiries, please send your feedback to us at media@developmentreimagined.com, and we will aim to respond ASAP.

December 2023

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With a growing population and increasing energy demands, Africa now stands at a critical, urgent juncture to harness its abundant wind resources, aligning with the global commitment to transition towards clean and green energy.

Why? The current operating capacity of operating wind farms in Africa is approximately 9 GW, only 1% of the global total. Comparatively, China – a third the size of Africa – has nearly 342 GW capacity of wind power, almost 40 times that of Africa. The UK – approximately 125 times smaller in land-mass than Africa – has close to 27 GW of wind capacity, three times of that of Africa. Japan is roughly 80 times smaller than Africa, while its capacity is 4.4 GW, around half of that in Africa.

So what is causing Africa’s current underutilization of its abundant wind resources and its underperformance compared to other regions? We believe that challenges such as a constrained global financial architecture and over-elevated risk premiums are the main reason for slow progress in African countries, making it difficult to scale up wind projects. Without comprehensive solutions, the existing disparities may be exacerbated. Therefore, additional support for Africa to bridge the financing gap and mitigate Africa risk premiums are essential for the continent to actively contribute to global renewable energy agenda and climate action goals, such as the COP28’s Global Renewables and Energy Efficiency Pledge.

Where to start off this investment? Our infographic delves into the promising landscape of wind power across various African regions and countries, shedding light on the immense possibilities for sustainable energy solutions, and displaying the diverse levels of potential wind power capacity among African countries. For instance:

Strong wind sources: We found that Eastern Africa and Northern Africa are endowed with more wind power potential than other African regions. Chad, Lesotho, Djibouti, Cape Verde, and Morocco are the top five countries in terms of wind sources.

Current operational wind farms: Southern Africa and Northern Africa have greater capacity, while as of January 2023, the Central African region does not have any eligible operating wind farms.

Best Prospective wind farm capacity: Northern Africa has the largest prospective capacity, while Central Africa remains at the bottom of the ranking. Egypt, Morocco, Algeria, South Africa and Namibia are the top five countries in terms of expected improvement in wind farm capacity.

Check out the infographic Africa’s amazing wind power potential below to learn more.

To find out how Development Reimagined can support you, your organisation, or Government, please email the team at clients@developmentreimagined.com.

Special thanks go to Lingqi Deng, Yunong Wu, and Yike Fu for their work on the graphics and for collecting/analysing the underlying data and this accompanying article.

The data was collated primarily from a range of sources, including the Global Energy Monitor and World Bank data.

If you spot any gaps or have any enquiries, please send your feedback to us at media@developmentreimagined.com, and we will aim to respond ASAP.

December 2023

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Africa, despite contributing a mere 3.8% to global greenhouse gas emissions, bears the weight of severe climate hazards. Environmental goods, integral to environmental protection and sustainability, play a crucial role in mitigating these challenges. In 2020, Africa spent US$26.22 billion on EG imports, constituting 77.5% of its overall EG trade volume, raising concerns about potential dependency on EG imports in the long run combat against climate change. While Africa is at a crucial junction in its industrial journey, the report underscores that local manufacturing of environmental goods is not only economically prudent but vital for Africa’s climate and manufacturing resilience, positioning the continent as a key player in the global market for environmental goods.  

The findings reveal Africa’s untapped potential for EG manufacturing, leveraging its rich natural resources, renewable energy, and mineral wealth. Integrated markets and regional collaboration can drive economic growth, competitiveness, and sustainability, supported by eco-friendly production policies. 

Employing a data-driven approach, the report identifies ten countries across Africa’s 5 sub-regions, including Kenya, Ghana, and South Africa, as promising hubs for EG manufacturing. These nations showcase readiness for EG production, signaling robust investment prospects in renewable energy components, electric vehicles, and waste management. 

The report also reveals an increase in China-Africa climate change cooperation, including investment in clean energy projects, but also indicates where even more can be done, including to add value to existing investments. Finally, acknowledging challenges like inadequate infrastructure, limited technical capabilities, and political influences, the report proposes targeted recommendations to overcome these hurdles. 

This report echoes a clarion call for collaborative action, urging governments, industries, and communities to unite for a greener and more prosperous Africa. The untapped potential of local EG manufacturing is presented not just as an economic boost but as a global “win-win” contribution to sustainability.   

Looking ahead, Development Reimagined will use this report to work with and encourage all partners to deliver new and sustained investment in environmental goods manufacturing in Africa, a key means for delivering green growth, environmental sovereignty and Agenda 2063.  

To access and download the full report, please click here for English and here for Chinese.

To talk with our global team of experts and consultants, please contact us at clients@developmentreimagined.com. 

November 2023

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The promotion of the Environmental Goods (EGs) value chain plays a vital role in the global pursuit of achieving net-zero emissions. EGs encompass products and technologies contributing to environmental protection and sustainability, spanning Environmental Protection, Renewable Energy, Environmental Monitoring & Assessment, and Environmentally Preferable Products.

Between 1994 and 2021, global trade in environmental goods grew significantly, yet it remains imbalanced worldwide. China constitutes 17.3% of global EGs exports, while the entire African continent contributes only 1%, with South Africa accounting for over half of that share. Looking forward, Africa could and ideally should emerge as a significant hub for manufacturing environmental goods, leveraging its natural resources, renewable energy, agricultural wealth, and mineral resources.

But how?

Our analysis has pinpointed 10 promising regional manufacturing hubs that African, Chinese and other global stakeholders should closely consider for investment. These top 2 selected countries are situated across 5 regions, each exhibiting diverse potential and are capable of unlocking substantial local capacity for environmental goods manufacturing across the African continent. Integrated markets and regional collaboration can drive economic growth, competitiveness, and sustainability, supported by regulations and policies promoting eco-friendly production.

Have a look at our analysis and review the 10 most promising hubs for environmental goods manufacturing in the infographic below!

To find out how Development Reimagined can support you, your organisation, or Government, please email the team at clients@developmentreimagined.com.

Special thanks go to Yike Fu, Yixin Yu, and Yunong Wu for their work on the graphics and for collecting/analysing the underlying data and this accompanying article.

The data was collated primarily from the IMF Climate Change Dashboard, African countries’ policy statements, various news articles, and our forthcoming report, “Unleashing Africa’s Untapped Potential For Environmental Goods Manufacturing.” which would be launched on November 2, 2023 (11:00 UK; 19:00 Beijing; 13;00 South Africa). You can register for the Zoom webinar here.

You can also watch a video recording of our Africa Climate Summit 2023 event on the same topic here.

If you spot any gaps or have any enquiries, please send your feedback to us at media@developmentreimagined.com, and we will aim to respond ASAP.

November 2023

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Reparations are meant to acknowledge and repair the causes and consequences of human violations in countries emerging from dictatorships, colonialism or racial injustice. Recently, this has extended to also include an increasing call for reparations in cases of loss and damage owing to climate change issues. The report unpacks the available financing options that have been fronted over time and used in practices such as special funds (funded through a mix of public and international funds and state public budgets but, it also makes a case for some unconsidered options for financing. The report offers a mix of cases studies such as Haiti and the High Indebted Poor Countries (HIPC) initiative, Kazakhstan and the Green Climate Fund, US-Japanese Americans Reparations and the MauMau of Kenya vs the British government. In the case of the MauMau, they were successful in their reparations claim as the British government agreed to pay £19.9 million to the MauMau for human rights violations such as torture and imprisonment that occurred in the 1950s. The monies were paid using the British public budget. The report explores the viability of the existing financial options that have succeeded which include taxation, adaptation fund, green climate fund, debt swaps and individual and organisational reparations. 

In the report, the Advocacy Team and Development Reimagined used a scorecard based on 15 criteria, to rate the existing options and then suggest innovative financing mechanisms. Some of the set criteria include sustainability of both the recipient and payee, effectiveness, value and access. Financial transaction tax (FTT) scored the most at 107 meanwhile options such as multilateral agreements scored the lowest at 70 also because it scored very lowly on factors such as recipient sustainability. 

Overall, the report recommends the financing options should be inclusive – consulting the recipients but most importantly – the financing options should combine a mix of existing and proposed mechanisms for a better outcome.  

The full report is available to download in English here .

October 2023

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After a very fruitful discussion, there were several key themes that emerged from the side event with our distinguished panelists.

Upcoming Report Preview: Unleashing Africa’s Untapped Potential for EG Manufacturing

Before the panel discussion, Ms. Yike Fu, Climate Programme Manager of Development Reimagined, previewed key findings from Development Reimagined’s upcoming report, “Unleashing Africa’s Untapped Potential for Environmental Goods Manufacturing.” The report seeks to guide African governments beyond renewable energy or critical minerals strategies, emphasising a long-term vision to stimulate sustainable development. It identifies 10 regional hubs for local production of environmental goods (EGs) in Africa, providing a comprehensive country analysis. Recommendations include collaborating with China and other development partners, investment in green infrastructure, skills development, robust supply chains, and trade and regulatory alignment.

Panel Disucssion: Scoping the Current State of Environmental Goods Manufacturing in Africa

Moderator: Ms. Hannah Ryder, CEO of Development Reimagined

Panelists:
Ms. Njike Jacinda Washington, Africa Finance Lead, UNFCCC Climate Champions
Mr. Albin Wilson, Chief Product & Strategy Officer, ROAM
Ms. Li Xia, CEO and founder, Shenzhen Power Solution Ind Co., Ltd (online)
Ms. Vandana Thottoli, Business Development Advisor, Dutch Fund for Climate and Development
Ms. Doosughun Takur, Director of Programmes, Clean Technology Hub 

Panelists discussed the current state of environmental goods manufacturing in Africa. Vandana Thottoli emphasised the infancy of Africa’s  environmental manufacturing activities and also stressed the need for more sustainable practices. Doosughun Takur, drawing from her experience in Nigeria, highlighted the nascent stage of environmental goods manufacturing in Africa while also expressing excitement about the start of such conversations.

Njike Jacinda emphasised the economic importance of the manufacturing sector in Sub-Saharan Francophone Africa, suggesting a focus on indigenous properties and localising manufacturing processes. Albin Wilson, Chief Product and Strategy Officer for a Kenyan electric vehicle manufacturer, Roam, stressed the need to localise design and development processes. Li Xia proposed a three-stage approach for manufacturers: assembling locally, manufacturing spare parts in Africa, and technology transfer.

Identifying the Ideal Environmental Goods Manufacturing Ecosystem

The discussion shifted to the ideal ecosystem for environmental goods manufacturing. Based on the development stages and ecosystem Lixia suggested, Hannah also asked Albin and other panellists their opinions about supply chain development: the potential for leapfrogging in this field. Albin shared Roam’s experience highligting his experience working with EV manufacturers in Kenya. He agreed that there is potential in bringing robotic welding systems as well as plastic injection moulding machines that already exist in Nairobi. The potential for leapfrogging development is therefore high which is quite promising.

Doosughun endorsed starting small, progressing from community to community, citing Nigeria’s experience after the removal of subsidies. Vandana cautioned against hasty full-scale manufacturing, citing budget, regulation, and capacity constraints.

The economic case for African countries manufacturing environmental goods should be better identified by data-driven analysis.

Njike stressed the need for comprehensive data to identify economic benefits and opportunity costs associated with environmental goods manufacturing. She highlighted the importance of exploring data related to policies like carbon emission reduction and carbon tax incentives. More specifically, she pointed out that the opportunity cost for not investing in green development is quite high and thus the decision to invest is a critical one for governments and other relevant stakeholders.

Transparent, stable and innovative policies are crucial for foreign investors to invest in Africa

Li Xia is about to launch her local manufacturing factory in Ethiopia soon. She emphasized the critical role of transparent and stable government policies in investment decisions. She proposed import tax adjustments to encourage local manufacturing. Li Xia also noted the potential of carbon credits for EGs manufacturers.

Scale is crucial to develp manufacturing capacity; This necessity limits many African nations’ ability to develop their industries. 

Albin gave a new perspective that though panellists agreed with Africa starting from simple and small-scale manufacturing, the reality is that manufacturing inherently needs “scale”. He estimated that there might not be more than three hubs for manufacturing EG goods in Sub-Saharan Africa based on this requirement. He said, “Whichever government can combine resources, get the players in place, and scale those players with subsidies will succeed.” He, however, pointed out that East African countries like Kenya and Rwanda are on the right path, with great potential to take a lead across the continent, while some nations rely too much on fossil fuel resources, which is both a blessing and a curse.

Indiginous African solutions for recycling to develp a circular economy

Njike also added that the circular economy is significant for green development and ingdigenous African recycling techniques, which are often  forgotten in major discussions, could actually provide innovative and profitable solutions that should be leveraged to impact the long-term manufacturing capacity.

The role of development partners in supporting Africa’s environmental goods manufacturing potential

Vandana and Doosughun shared initiatives by their organizations, advocating a combination of grants, technical assistance, and investment equity to support the private sector. Njike emphasized the need for African-led, innovative financial instruments and bridging information gaps between investors and entrepreneurs.

The Approach for Manufacturers Working with Development Partners

Albin shared ROAM’s working capital partnership which is crucial for timely procurement. Moreover, he also highlighted that development partners are significant, especially in supporting innovation and high-risk business decisions. Li Xia highlighted that Chinese manufacturers face many information gaps when entering the African market. These are areas where development partners could play a supportive role

Closing Remarks: Unlocking Green Development Opportunities in Africa Through Manufacturing

Ms. Fikayo Akeredolu, China Africa Programme Officer at the African Climate Foundation, closed the panel, emphasising the timeliness of the   discussions around localising environmental goods manufacturing in Africa. She urged partners to unlock the estimated US$800 million potential in environmental goods manufacturing capacity which aligns with ACF’s Renewable Energy Manufacturing Initiatives.

We sincerely thank all of our distinguished panellists and attendees for their invaluable contributions to this important conversation during Africa Climate Week 2023!

Development Reimagined will soon be launching the “Unleashing Africa’s Untapped Potential for Environmental Goods Manufacturing”. You can find key insights from the report in our publicly available infographic. Stay tuned for the report release very soon! You can also watch the full event in the video below.

October 2023

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• Al-Hamndou Dorsouma, Ag. Director, Climate Change and Green Growth, African Development Bank (AfDB)
• Olympus Manthata, Head of Climate Finance, Development Bank of Southern Africa (DBSA)
• Thembilise Salman, Senior Professional, New Development Bank (NDB)

Co-hosts:

• Hannah Ryder, CEO, Development Reimagined (MC)
• Faten Aggad, Senior Advisor on Climate Diplomacy, African Climate Foundation (ACF)
• Jill Duggan, Executive Director, Environmental Defence Fund Europe (EDF)

During Africa Climate Week 2022 in Libreville, Gabon – Development Reimagined co-hosted a side event with African Climate Foundation (ACF) and Environmental Defence Fund Europe (EDF). Our joint event convened key stakeholders in Africa’s climate finance and banking community to explore the reality of green banking in Africa. The event drew on lessons learnt to clarify what is needed from international climate financing mechanisms to unlock quality financing for green energy transitions and to achieve development goals such as Agenda 2063. The aim was to also help shift the narrative away from Africa as a ‘risky’ environment for large-scale climate investment and towards one brimming with green potential.

After a very fruitful discussion, there are several key themes that emerged from the side event. Below you can find a summary of the key talking points, as well as some important insights from our distinguished panellists.

Shifting the narrative around climate finance on the continent

When opening the panel discussion, Development Reimagined’s CEO Ms. Ryder asked participants to avoid using common tropes such as ‘bankability’ and ‘de-risking’, and instead challenged all attendees to speak to solutions at the financial and structural level. She encouraged all to think about shifting the perspectives of African countries as ‘risky’ environments for climate investment, and to explore the tools we need to shift these perspectives.

Exploring what green banking means to African countries

Ms. Ryder began by asking the panellists to explain their understanding of green banking and what it means to the continent, and what the demand for green banking is.

Dr. Dorsouma from the AfDB highlighted that ‘MDBs like the AfDB have been very active in promoting the concept of green finance, sustainable finance, as well as green banking’, and that we need to ensure that ‘funding from financial institutions, including local institutions, can target green investments and green projects…its about shifting from support to brown sector to green sector’.

He highlighted the AfDB’s initiatives over the past several years. He gave the example of the African Financial Alliance on Climate Change, which was launched in 2018 and which aims to bring all the financial institutions in Africa to the table. This has been very successful in understanding green banking and how to implement the concept on the continent.

Mr. Manthata from the DBSA followed on from Dr. Dorsouma by stressing that green banking is more about the need for ‘fit for purpose’ financing to accelerate the transition towards low-carbon economies. He also underlined the issues of utilising tools ‘that make financing easier, more specifically for private financing to come into the space and support projects especially with countries looking at more ambitious NDCS’.

Mr. Salman of the NDB highlighted that the Paris Agreement has catalysed a lot of financing in this space, with countries racing to meet their NDC targets. However, he also pointed out that the demand for green banking is still quite low, as the attitude often tends to be that the continent only contributes 2-3% of global greenhouse gas emissions and so there is no need for climate change products. However, Mr Salman pointed to ‘the driving industrialisation led by agenda 2063’ and believed that this will ‘increase the demand [for] low-carbon climate resilient economies’.

During the Q&A session one audience member posed a question around the future of green banking, and whether the institutions present believed it to be well understood or not. Ms. Ryder linked this question back to the original question on the general understanding of green banking, and also asked Ms. Aggad to address this question in her closing remarks.

Highlighting the tools and models needed to encourage green banking on the continent

Ms. Ryder asked panellists to expand on some of the tools they have been using to promote climate finance, and how have they been working with different actors to bring in new business models.

Dr. Dorsouma shared several examples of tools used by the AfDB to promote climate finance. For example, the AfDB initiated its first green bond program in 2013 and so far have been able to mobilise $10 billion to invest in 100 eligible green projects. The success of these projects was the AfDB’s realisation that they needed ‘to use specific tools to help financial institutions to green their portfolios and mainstream climate finance’.

During the Q&A session, one member of the audience asked the AfDB about the protocol for financial institutions that are not initially eligible for AfDB-led projects, and whether they provide any kind of capacity building for these institutions to become eligible for these projects. Dr. Dorsouma replied that the AfDB conducts due diligence to screen projects for approval. If there is a certain level of capacity lacking, then the AfDB can include technical assistance in the project to help the executing agency increase capacity before starting the implementation of the project.

The role of private sector and the need for long-term climate financing

Mr. Manthata gave the example of the DBSA’s Climate Finance Facility, which is co-financed by the Green Climate Fund and which has been part of the green banking movement. The DBSA conducted extensive consultations with the private sector in order to understand their pipeline and what they are not able to take forward due to certain factors.

Mr. Manthata also highlighted the issue of longer-term financing: ‘We talk about people being hesitant around risk but one of the things that came up was the concern around the ability to finance projects where you require financing for a long term.’ The DBSA uses their Climate Finance Facility to take the tail end of the project’s tenure, making it a lot easier for commercial banks to come in and thus allowing projects that would have otherwise not been financed to start to come on stream.

The question of debt sustainability

Ms. Ryder raised the issue of financing and highlighted that while many countries require financing, they are crossing their debt-sustainability thresholds. She asked the panellists to speak to how their institutions are dealing with this issue and whether they are finding ways to absorb that challenge.

Mr. Salman emphasised the importance of the structure the projects to be able to garner support from various contributors, particularly the private sector. This in turn puts lets pressure on the state institutions.

Dr. Dorsouma pointed to the  AfDB’s Debt Sustainability Framework that ensures that the AfDB does not add to debt distress that countries are already facing.

During the Q&A session Dr. Dorsouma responded to a question regarding capacity and debt sustainability when screening projects for climate risk. Dr. Dorsouma stated the AfDB’s framework helps identify opportunities to strengthen climate resilience or include a climate finance component into the project. He also stated that if a country cannot take on a loan to execute a project, the AfDB can also explore the possibility of providing grants so that the country is still able to participate in the project and benefit from the climate finance, especially if it is a regional project.

Final Reflections and closing remarks

Ms. Duggan of Environmental Defence Fund Europe providing some closing reflections on the panel discussion. For Ms. Duggan, one thing that stood out during the discussion was the ‘need for mainstreaming and capacity development, not just in Africa but globally. It’s seeing Africa’s real opportunity with Agenda 2063 coming to the fore, it’s making sure that we find a way to mainstream climate resilience into our investments to ensure that there is resilience against climate risks, including financial risk as well as physical risk’. 

Ms. Aggad from the African Climate Foundation provided the closing remarks for the event, and drew upon three specific challenges that the panel discussion had brought to the fore:

Long-term investments: How do we structure development institution’s funding to de-risk the need for long term investments? How do we mix and match funding to be able to attract private sector investment in green projects? Doing so is critical in order to ensure successful energy transitions across the continent.

Regional cooperation: How can countries come together to respond to debt sustainability challenges and ensure that countries can still access financing for important green projects?

Concessional funding: How can African countries and financial institutions increase access to concessional financing to increase access to green finance, and to enhance the interest of the private sector in green projects across the continent?

These questions and contributions from our panellists and attendees highlighted not only the major challenges in the area of climate finance on the continent, but also some of the key mechanisms being used to unlock quality financing for green energy transitions and to explore the massive green potential across the African continent.

We thank all of our distinguished panellists and attendees for their invaluable contributions to this important conversation.

We have also published Development Reimagined’s 5 Key Takeaways from UN Africa Climate Week 2022, available here.

November 2022

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