While climate change poses a major threat to Africa's economic development and infrastructure, it also offers substantial greenfield investment opportunities supporting climate action The infrastructure financing gap in Africa is enormous, estimated at an additional $60-100 billion per annum to meet basic infrastructure needs. These requirements will increase in response to socio-economic changes and the need to move towards a low carbon and climate-resilient economy.
50 African countries have now submitted their Nationally Determined Contributions (NDCs), which identify a $3 trillion collective investment opportunity across various sectors by 2030. Consequently, the Africa NDC Support Hub was established to assist African countries to implement their NDCs and take advantage of the opportunities presented by climate change.
The magnitude of these investments in infrastructure requires private sector involvement to mobilise the resources efficiently and to scale. Speaking at a joint AfDB-UNEP-WWF event at the 4th United Nations Environment Assembly, Dr. Anthony Nyong, the Bank's Director for Climate Change and Green Growth, presented the Bank's dual approach to private sector engagement for low carbon development.
The first is the African Financial Alliance for Climate Change (AFAC). Launched in May 2018 at the Annual Meetings of the African Development Bank, AFAC aims to mobilise domestic resources from financial players across the continent to support climate-resilient and low-carbon development pathways, and to align financial flows with the Paris Agreement.
However, the continent's ability to mobilise private sector capital needs to be preceded by an enabling environment for private sector to invest in Africa. "The most forward-thinking private investors are on the hunt for any green investment that offers a reasonable yield on the continent," said Dr. Nyong, while calling for a closer focus on regulatory and policy reform to support private sector engagement.
Infrastructure development and private sector resources mobilisation must be environmentally sustainable. The nature of climate change risks is that they generate broad social and economic impacts, which the private sector may not always take fully into account. Therefore, the Bank's second intervention includes tools to mainstream climate resilience into infrastructure and the pool of climate finances available to the Bank and regional member countries (RMCs).
Some of these tools include: Climate Change Action Plan 2016 - 2020, Climate Safeguard System, Greenhouse Gas Accounting and Reporting Tool, Green Growth M&E Framework, Green Bonds Framework, Africa Green Growth Index, Environmental and Social Safeguards, Guidelines for the mainstreaming of environmental and climate change in national income accounting, and the African NDC Support Hub to provide technical assistance and project development. Dr. Nyong cautioned against the adoption of a "grow today and clean up tomorrow" development paradigm on the continent, and emphasised the importance of getting it right the first time in regard to Africa's economic development.
At the joint 4th UNEA event, the African Development Bank, the WWF and the UNEP agreed to develop a programme on Africa's ecological futures: a long-term, implementable approach to ensure environmental sustainability on the continent. The programme is in response to the seminal Bank - WWF Africa's Ecological Footprint report which highlighted Africa's increasingly large and unsustainable ecological footprint.