The African Development Bank (AfDB) Group and other Multilateral Development Banks (MDBs) met in Washington DC from January 17-18 to discuss the establishment of a Climate Investment Facility (CIF). The CIF portfolio of three new multi-donor trust funds aims at supporting poverty reduction and economic growth with an emphasis on climate change mitigation, adaptation and deforestation. The CIF will focus on countries with the greatest potential for transformation towards low carbon economy, countries with particular adaptation challenges as well as important carbon sinks.
Over the last two years, the role the MDBs can play in addressing global challenges posed by climate change has gained increased recognition. Each MDB has undertaken to develop climate change strategies and programs of actions tailored to their particular client needs, largely based on resources and funding mechanisms currently available. The CIF is expected to start with some US$6.5 billion of additional financing.
Donors are expecting that the MDB collaboration would be broadened and deepened in relation to the proposed CIF. The private sector is also expected to play an increasing role in efforts aimed at dealing with the effects of climate change. Principles for private sector investments are therefore needed to ensure the long-term sustainability of the evolving markets for low carbon technologies and climate resilient development. Discussions during the Washington focused on issues covering the types of investments needed to accelerate a market based transformation towards low-carbon growth, level of profitability required; reasonable leverage ratios, and methodologies to determine appropriate subsidy associated with types of investments for achieving financial sustainability for similar activities.
The meeting was attended by 36 participants from the African Development Bank (AfDB), the World (WB), Asian Development Bank (AsDB), Inter-American (IADB) and European Bank for Reconstruction and Development (EBRD) Banks, US Treasury and Japanese Government.