Private sector must grow 36% annually to bridge Africa's climate finance gap, ADB
African Development Bank: Private sector financing in Africa needs 36% annual increase until 2030 to close climate finance gap, writes Charles Mkoka.
Sharm El Sheikh, Egypt — New research by the African Development Bank Group reveals that private sector financing in Africa needs to increase by 36% annually until 2030 to close the continent's climate finance gap, writes Charles Mkoka.
The estimated gap, evaluated at an average of $213.4 billion per year, underscores the importance of addressing Africa's climate financing needs, projected at up to $2.8 trillion over 2020–2030, or $250 billion annually.
The report emphasises the need to overcome both demand- and supply-side barriers to unlock private climate financing. It calls for the development of innovative financing instruments to leverage the continent's vast investment opportunities in climate and green growth.
During the opening remarks, AfDB President Akinwuni Adesina highlighted the inadequacy of developed countries' commitment to providing $100 billion annually in climate finance to developing countries.
He stressed that public climate financing must be complemented by the mobilization of private sector resources.
"To mobilise more private sector climate financing for Africa, we launched the African Financial Alliance for Climate, bringing together all financial institutions and stock exchanges in Africa to green the financial ecosystem. Financial institutions should integrate climate financing into all their operations," said Adesina.
He also emphasised that valuing companies on the stock exchange based on the greenness of their portfolios will incentivize greater investments in green initiatives.
The report also underscores the significant role of Africa's vast natural capital, valued at $6.2 trillion in 2018, in bridging the climate finance gap and promoting green growth transitions.
Sustainable management of Africa's natural resources can transform them into financial assets to support climate adaptation, mitigation, and investments in green growth.
To achieve this, the report recommends the implementation of appropriate policies and instruments, including fiscal measures, to accurately assess the true value of Africa's natural capital.
It also emphasises the need to strengthen local content and value addition, build institutional capacity, address governance gaps, and establish regional value chains and markets to benefit from cross-regional synergies.
The findings of the report highlight the urgency of mobilising private sector resources and leveraging Africa's natural capital to bridge the climate finance gap and ensure a sustainable and green future for the continent.