The African Development Bank Group has launched on 15 November 2022, in Sharm el-Sheikh, Egypt, on the sidelines of COP 27, the African Green Bank Initiative, a new initiative for green banks. It will be backed by the African Green Finance Fund (AG3F) next year, with the aim of helping to structure and develop an ecosystem of local green finance mechanisms on the continent in order to increase the mobilization of climate finance.
According to a report co-created by the African Development Bank (AfDB) and the Climate Investment Fund, green banks have the potential to increase the capacity of African countries to access and mobilize the climate finance needed to implement their NDCs and national climate and development goals. Thus, the establishment of a green finance ecosystem could generate $3 trillion in climate finance opportunities on the continent, while over the period 2020-2030, the financing gap to address climate change is estimated at between $100 billion and $130 billion per year, according to Akinwumi Adesina, the AfDB President.
The African Green Bank Initiative, which will be backed up next year by a $1.5 billion trust fund due to close in 2025 - the African Green Finance Facility (AG3F) - is a strong response to the climate emergency. "Green banks are specialized financial institutions with a mandate to invest in projects that support sustainable, environmentally friendly, fair and climate-resilient development. It is a powerful mechanism for mobilizing domestic and external resources and financing," said Audrey-Cynthia Yamadjako, Coordinator of the AG3F.
The launch of this initiative gives a unique framework for the African Development Bank to provide governments and financial institutions (public and private banks, microfinance, etc.) with technical assistance grants, fundraising support, and co-financing opportunities for green projects, by providing credit enhancement solutions to reduce the risks inherent in investing in sustainable projects.
"This initiative marks the AfDB's commitment to provide concrete, innovative solutions that will result in increasing the share of global climate finance benefiting the African continent. It will create innovative instruments to combine grants, private capital, public funds and long-term concessional resources to meet local market needs," said Dr. Al Hamndou Dorsouma, Director of the Bank's Climate Change and Green Growth Department.
As a reminder, the African Green Bank Initiative is a key point of the new strategic framework on climate change and green growth adopted by the AfDB Board of Directors in October 2021. Launched at COP 26 in Glasgow, it is part of the AfDB's High 5 priorities: Light Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the quality of life of people in Africa.
About the African Development Bank
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.