Pro-Africa financial infrastructure could help Africa feed the world. Africa is home to an estimated 60 percent of the world’s uncultivated arable land. Credit: Joyce Chimbi/IPS
– Although long profiled as the face of climate change, a high-risk continent with a pipeline of unbankable green projects, there are areas where Africa is leading the world. The 1987 accidental discovery of the first deposit of natural hydrogen during a water drilling campaign in Bourakebougou village, Mali, is today proving that Africa can export viable green solutions.
Naturally occurring or geological hydrogen is low-carbon and cheap and can be used for transportation, heating, and power generation. A growing number of countries, including Oman, New Caledonia, Canada, Russia, Australia, Japan, Germany, New Zealand, France, and Switzerland, have now joined the scramble for natural hydrogen, and this could trigger an energy revolution.
Senegalese chef Pierre Thiam told delegates at the ongoing COP28 Summit in Dubai, UAE, that with the right support, Africa will be the hub for green projects.
“Today, fonio is on the market in the United States, providing a stable source of income for hundreds of smallholder farmers despite the climate crisis.”
“The grain does not need much to grow and is often referred to as ‘the lazy farmer’s crop’ for whatever the weather; as long as you have put the seed in the ground, it will grow.”
Fonio is an ancient drought-tolerant, gluten-free, nutritional powerhouse that can be used like any other grain and has had its roots in the arid Sahel belt for over 5,000 years. Since 2017, Yolélé, which roughly translates to ‘let the good times roll’, is Thiam’s U.S.-based West African food company, which has been collaborating with smallholder farmers in sharing the ancient West African grain in the United States and is now expanding internationally.
With the right financial structures, Thiam says the ground is ripe for such innovative initiatives. While Africa contributes the least to climate change yet suffers the worst consequences, it also represents 20 percent of the global population, attracting less than three percent of global investments, particularly into green energy.
Despite immense green energy potential and growing political goodwill, Africa still lags other regions on many green growth dimensions. The climate finance architecture must now work for Africa, for the risks are enormous and the size of investment needed is over 200 billion dollars in energy alone by 2030.
“At the African Development Bank (AfDB), we really see the lack of climate finance as the biggest impediment towards accelerating development on the continent. Just to put it into context, the level of financing gap will be 2.8 trillion by 2030 just to implement 51 African countries Nationally Determined Contributions, representing each country’s commitment to reduce greenhouse gas emissions,” said AfDB’s Yamadjako Audrey-Cynthia, Principal Climate Finance Officer and Africa Green Bank Initiative Coordinator.
According to AfDB, to close Africa’s climate financing gap by 2030, approximately USD 213.4 billion will need to be mobilized annually from the private sector to complement constrained public resources. Africa received USD 4.2 billion in private climate finance in 2019–2020, or 14 percent of total climate finance flows of USD 29.5 billion. It requires USD 242.4 billion a year on average until 2030—$2.7 trillion over 2020–30—to implement the climate action expressed in the latest NDCs.
Speaking during a session titled ‘Green Banking and a Renewed Climate Finance Architecture for Africa’ at the ongoing COP28 Summit, she spoke of the huge financing need on the continent, which is also an investment opportunity, for Africa is the next green investment frontier. AfDB turns these gaps into investment opportunities by looking into practical solutions at the local level to develop a bankable pipeline of green projects, as quite often, existing projects need to be better structured.
“We also need de-risking instruments such as blended financing—one of several tools to mitigate risk and facilitate financing for private sector-led projects—at the local level to make these projects attractive for the private sector to invest in. We are proactively mobilizing and scaling up climate finance for green infrastructure in Africa. Importantly, we also work at the local level to build the climate financial architecture through green investment vehicles embedded in existing commercial banks so that we do not re-invent the wheel,” she observes.
A report titled ‘Developing Green Banking Ecosystems’ authored by Jean-Paul Mvogo, a nonresident senior fellow at Africa Center, reveals that “financing mobilized to face Africa’s climate challenges represented roughly one-tenth of its needs, fueling a feeling of climate injustice and also depriving Africa of a growth capable of providing work for the hundreds of millions of young people who will enter the labor market in the next two decades.”
Stressing that “one solution to increase green financing for Africa lies in the implementation of strong and proactive policies that: address systemic constraints hindering the absorption capacity of African countries in terms of green projects and their financing; attract new categories of national and international investors; and ensure the optimal allocation of these new resources.”
Africa will also require about $1.3 trillion annually to meet its sustainable development needs by 2030—and thus to achieve green growth. Most of this finance is expected to be met through private finance. To meet these needs and given the current levels of public climate finance, private climate finance should increase by about 36 percent each year until 2030. Africa has great potential and self-interest to achieve green growth.
In a powerful signal of support during COP28, African and global institutions, together with the governments of Germany, France, and Japan and philanthropies, have already pledged over USD 175 million to the Alliance for Green Infrastructure in Africa (AGIA). The landmark initial pledge will help to rapidly scale up financing for transformative climate-aligned infrastructure projects across the continent.
The new pledges will also advance AGIA towards its first close of USD 500 million of early-stage project preparation and development blended capital. The Alliance is a partnership of the African Union Commission, the African Development Bank, Africa50 and other partners. It works to unlock up to USD 10 billion in private capital for green infrastructure projects and to galvanise global action to accelerate Africa’s just and equitable transition to Net Zero.