The African Development Bank has launched the African Green Bank Initiative, a model for deploying green financing across the continent intended to boost the promotion of resilient, green and sustainable growth across the continent.
The initiative, which was presented at the just-concluded UN Climate Change Conference (COP27) in Egypt, will support the implementation of African countries’ Nationally Determined Contributions (NDCs).
The Green Bank Initiative, which is Part of the African Financial Alliance on Climate Change (AFAC), will be supported by the African Green Finance Facility Fund (AG3F) which will provide technical assistance to governments and financial institutions in creating and capitalising green facilities, co-invest alongside those in green projects and provide de-risking instruments to increase private sector mobilisation.
Launching the initiative, African Development Bank vice president for Energy, Power, Climate and Green Growth, Kevin Kariuki, said the African Green Bank model would help increase the continent’s access to global climate finance.
“The Green Bank Initiative is a powerful tool for reducing financing costs and mobilising private sector investments in climate action in Africa,” Kariuki said.
He said that multilateral development banks and international financial institutions had a crucial role in enabling local financial institutions to develop a green pipeline of projects and ease their access to resources.
According to him, the African Green Bank initiative, which will be endowed with a trust fund of $1.5 billion, was conceived as part of measures to facilitate access to global finance from the current 3% to 10% annually by 2030.
Kariuki said that the initiative was based on an assessment by the African Development Bank and the Climate Investment Funds on the potential of Green Banks in six African countries, namely Benin, Ghana, Mozambique, Tunisia, Uganda, and Zambia.
“The assessment revealed that green banks have significant potential for attracting new sources of catalytic funds when supporting low-carbon, climate-resilient development through blending capital and mobilising local private investment for green investments in Africa,” he said.
Story was adapted from AFDB.