During the launch workshop of the African Development Bank 2023 Country Focus Report for Mali, the Malian private sector learned of investment opportunities to be seized in the context of financing for climate and green growth.
The African Development Bank has recommended that Mali harness its vast natural capital potential to leverage private finance for climate and green growth, a key finding of the Bank's 2023 Country Focus Report for Mali.
The report, "Mobilizing private sector financing for climate and green growth", was launched on 3 October in Bamako with a workshop chaired by Alousséni Sanou, Minister of Economy and Finance and Finance and Bank Governor for Mali.
The report reviews recent macroeconomic and financial developments and prospects, private sector financing for climate and green growth, and harnessing natural capital as a complementary financing option.
Despite shocks associated with sanctions imposed by the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU) and the war in Ukraine, Mali recorded a growth rebound of 3.7% in 2022 (against 3.1% in 2021). This growth was driven by the primary (a 9% increase in cereal production) and secondary (a 4% increase in industrial gold production) sectors.
Mali is expected to register real GDP growth of 5.1% in 2023 and 5.3% in 2024. These growth prospects are likely to benefit from several contributing factors: the resumption of cotton production; the revitalization of extractive activities with the adoption of a new mining code, and lithium extraction from 2024; and the revival of the industrial fabric and state support for restructuring struggling industrial units.
However, despite its very low contribution to global greenhouse gas emissions at 0.06%, Mali is one of the countries most vulnerable to climate hazards (175th most vulnerable out of 185 countries in 2021, according to Notre Dame Global Adaptation Initiative). Mali's Nationally Determined Contribution (revised for 2021) estimates its financing needs to address climate change at $15.3 billion over the period 2020-2030.
Opportunities for the private sector
Private sector financial flows for climate and green growth are weak, amounting to $33.3 million on average from 2019-2020 (8.9% of total climate financing) and are ten times less than public sector finance ($342.9 million, or 91.1%). The report's findings also show that for every dollar of public financing spent on combating climate change, Mali was able to mobilize just $0.097 in private finance, underscoring the unattractiveness to private investors of climate-related projects.
Yet report notes numerous opportunities to boost private investment. First the accreditation to the Green Climate Fund of national bodies: the National Agricultural Development Bank, the Development Bank of Mali, the International Bank for Mali, and the Mali Folkcenter. Other opportunities include the issuance of green bonds, access to the Clean Development Mechanism and the sale of carbon credits, the creation of a private sector window of the Green Climate Fund and the establishment of environmental taxation on the polluter pays principle.
The private sector could also draw on the huge opportunities offered by Mali's natural capital in terms of renewable resources, (estimated at $82.2 billion in 2018) and non-renewable resources (estimated at $6.6 billion in 2018).
Sanou highlighted the importance of Mali's 2023 Country Focus Report, which provides Malian policymakers with the tools they need to play an active role in the upcoming United Nations Climate Change Conference (COP28). "The African Development Bank has financed many green projects in Mali," he said.
"The Government is concerned about the need to improve private sector access to finance, which explains the establishment of the Private Sector Guarantee Fund," he continued.
The minister also spoke of increasing private climate and green growth finance as a sustainable alternative to cover Mali's climate finance needs, in addition to public finance. He did, however set limits on the scope of private financing, saying that there were issues of national and strategic interest, such as hydroelectric dams, which were the responsibility of the state and not the private sector.
The Minister of Environment, Sanitation and Sustainable Development; the Secretary-General of the Ministry of Energy and Water; private sector actors, including the National Employers' Council of Mali; and technical and financial partners, including the International Monetary Fund, the World Bank and the European Union attended the launch of the report.
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