( AfDB) - The African Development Bank has launched the African Green Bank Initiative to tackle Africa’s key barriers to climate financing and promote resilient, green and sustainable growth.

The Green Bank Initiative will be supported by the African Green Finance Facility Fund (AG3F), which aims at developing an ecosystem of local and regional Green Finance Facilities to mobilize private investment in support of climate transition. AG3F promotes the deployment of the Green Bank Model throughout the continent. To ensure rapid deployment, AG3F will partner with existing local financial institutions and leverage on their network, financing capacity and experienced staff.

For its pilot phase, AG3F aims at mobilizing $10 million for the technical assistance, of which $1.6 million have already been secured, and $90 million to support the capitalization of the first Green Finance Facilities. Contributors will include donor countries, multilateral development banks, development finance institutions (DFI), climate funds and philanthropic or impact investors. First beneficiaries include Banque Nationale d’Investissement de Côte d’Ivoire and Caisse des Dépôts et Consignations du Bénin, which will develop pipelines of clean energy, resilient infrastructures or smart agriculture projects.

Green Finance Facilities will support small and medium-sized enterprises (SMEs) and local communities by offering direct access to climate finance. The initiative will help African countries implement Nationally Determined Contributions (NDCs), as investment needs are estimated at $2.8 trillion by 2030 and funds invested on the continent still represent a limited share of global green finance flows.

AG3F will benefit from best practices and support of strategic partners for the creation, financing and deployment of Green Banks. These partners have built an international reputation in the area of climate finance and include the leading European asset manager Amundi, the knowledge platform Green Bank Network, the leading multilateral fund Climate Investment Funds (CIF) and Canada’s Climate Action in Africa project. 

Audrey-Cynthia Yamadjako, co-ordinator of the Green Bank initiative, welcomed the onboarding of those partners in the AG3F projects: “We are delighted to start the work with our partners in the pilot phase of AG3F. We will benefit from their technical knowledge, investment vehicles and funding capacity to create the first African Green Finance Facilities”.

According to African Development Bank Vice President for Private Sector, Infrastructure and Industrialization,Solomon Quaynor, “technical assistance will enhance Green Finance Facilities’ green project management and governance and is therefore key to attract private capital by entrenching long-term investor confidence.” Technical assistance will be needed to create Green Finance Facilities and build up their technical capacities, including by implementing monitoring, risk evaluation and reporting tools and structuring a bankable pipeline of green projects.

Upon launch of the African Green Bank Initiative at the UN Climate Change Conference (COP27) in Egypt in November 2022, African Development Bank Vice President for Energy, Power, Climate and Green Growth, Kevin Kariuki highlighted that the initiative was a key stepping stone to meet Sharm El Sheikh implementation plan. 

“The Green Bank Initiative is a powerful tool for reducing financing costs and mobilizing private sector investments in climate action in Africa,” Kariuki said. He said multilateral development banks and international financial institutions had a crucial role in enabling local financial institutions to develop a green pipeline of sustainable and “Paris-aligned” projects.

The initiative is part of the African Financial Alliance on Climate Change (AFAC). Akinwumi Adesina, President of the African Development Bank Group, explained as part of AFAC that mobilizing the financial sector will be key to address climate change in Africa: “Africa’s financial actors need to work together creatively to mobilize global financial resources at scale that can support local innovation, and that drive climate-resilient and low-carbon development on the continent”.

About the African Development Bank Group

As Africa’s premier development finance institution, African Development Bank (AfDB) objective is to spur sustainable economic development and social progress in African countries, thus contributing to poverty reduction. AfDB’s strategy for 2013-2022 focuses on two objectives: improving the quality of Africa’s growth and the transition to green growth.