The Government of Benin, in collaboration with international financial institutions and development partners, has launched (on 15 November) an ambitious climate action framework to accelerate the country's green transition and support sustainable development.
Unveiled at this year's United Nations Climate Conference (COP29) in Baku, Azerbaijan, several new initiatives encompass a carbon monetization mechanism, innovative credit instruments, a common policy matrix, and advanced financing strategies. These efforts underscore Benin's commitment to unlocking climate finance for transformative impact.
This multifaceted framework is designed to mobilize both public and private sector resources to address Benin's climate adaptation and mitigation priorities, supporting the nation's sustainable development goals (SDGs) and Nationally Determined Contributions (NDCs) while preserving debt sustainability.
Romuald Wadagni, Senior Minister at the Ministry of Economy and Finance of Benin stated: "With strong support from our partners, Benin is translating climate goals into concrete action...Leveraging our experience in international capital markets, like our 2021 SDG bond framework, we aim to unlock private investment to drive climate action. By harnessing innovative financing, we are transforming our ambitions into concrete results that will advance adaptation and mitigation efforts."
He added: "It is a commitment to a sustainable, resilient future that will resonate beyond Benin's borders for the greater benefit of our planet."
Benin has a proven track record in climate policy and financing, supported by $1.4 billion from the World Bank Group's International Development Association (IDA) and an additional $200 million from the IMF's Resilience and Sustainability Facility (RSF). These financial commitments, alongside a €195 million partial credit guarantee from the African Development Bank, lay the foundation for Benin's pathway towards a low-carbon, climate-resilient future.
In a joint Climate Finance Roundtable co-convened by the IMF and the World Bank Group in July 2024, the Government of Benin and its development partners expressed full commitment to reinforcing Benin's efforts in addressing climate change by supporting the country in establishing a climate finance country platform through further catalyzing financial resources.
The estimated financing gap to achieve the goals set in Benin's NDCs is about $10 billion by 2030. Following this roundtable, the partners have been working on financing options and technical assistance to boost Benin's efforts to enhance its climate action.
Key Climate Action Streams:
- Carbon Monetization Mechanism with Enhanced Credit Instruments
Benin is implementing a carbon monetization strategy backed by 2.5 million carbon credits from energy and regenerative agriculture projects. Managed by the National Carbon Registration Authority, these efforts are supported by the Global Green Growth Institute and Luxembourg, with proceeds channeled to support adaptation and mitigation initiatives in alignment with Benin's NDCs.
- Enhanced Budget Support through a Common Policy Matrix
Following the Climate Finance Roundtable, a three-year framework has been established with the World Bank Group, African Development Bank, AIIB, and OPEC Fund to coordinate budget support for scaling climate financing in Benin. A common policy matrix, developed with IMF input, will also be established to enhance aid effectiveness, streamline policy reforms, and spur climate action.
- Attracting Private Investment through Innovative Financing
Through the World Bank Group's Guarantee Platform, Benin has secured a €200 million guarantee to mobilize €500 million in long-term financing climate resilience projects, with additional support from the European Union to strengthen its green bond market to attract institutional investment in green projects.
- Establishing a One-Stop Window for Local Financial Access
In collaboration with the World Bank, International Finance Corporation, Global Green Growth Institute, and the West African Development Bank, Benin is setting up a finance platform to facilitate lending to local banks and microfinance institutions. This initiative is expected to enable long-term investments by small and medium enterprises, fostering local business growth aligned with green investment objectives.
