In a bid to ramp up climate action in Africa, the African Development Bank (AfDB) has introduced an investment initiative aimed at leveraging private sector resources while optimizing the use of concessional funding.
This move comes amidst growing concerns over the urgency to address climate change and the need for innovative financing mechanisms to support sustainable development initiatives across the continent.
The initiative, spearheaded by the AfDB’s Concessional Finance and Private Sector Operations Department, introduces Class C Green+ shares under the umbrella of the Trade and Development Bank (TDB). These shares, designed to attract a wide spectrum of impact investors, including institutional investors such as pension funds, insurance companies, sovereign wealth funds, and development finance institutions, aim to channel additional capital into TDB’s equity capital for climate-focused projects.
“We hope that the involvement of CTF will be instrumental in crowding-in the participation of additional investors into this class of shares and praise the establishment of the Project Preparation Facility unlocked by this investment,” AfDB said.
Speaking on the significance of this initiative, Kariuki, a representative from the AfDB, emphasized its high replicability potential in optimizing the utilization of limited concessional funding while facilitating the mobilization of substantial resources from the private sector. He highlighted the essential role of the Climate Technology Fund (CTF) in crowding-in additional investors and commended the establishment of the Project Preparation Facility, made possible by this investment.
Mary Kamari, Corporate Affairs and Investor Relations Executive at TDB Group, echoed the sentiment, underlining the pressing need for capital to support climate action in Africa. Kamari emphasized the challenges faced in sourcing bankable projects, with many initiatives faltering at the feasibility and business-planning stages. She expressed optimism about CTF’s technical assistance support in unlocking new project opportunities in the region, thereby amplifying the impact of TDB’s endeavours in the climate space.
“While much more capital is needed to support climate action in Africa, we are also facing constraints in the availability of bankable projects, with many projects failing at feasibility and business-planning stages. In this regard, we also look forward to CTF’s technical assistance support to unlock new project opportunities in our region and scale-up our impact in the climate space.”
TDB’s Class C Green+ shares represent a strategic evolution from the success of Class B shares launched a decade ago. These shares aim to attract a diverse range of impact investors, leveraging their financial resources and expertise to bolster TDB’s efforts in driving climate-resilient development across Africa. By opening up investment opportunities to a broader investor base, TDB aims to catalyze sustainable growth while addressing the pressing challenges posed by climate change.
The launch of Class C Green+ shares underscores the AfDB’s commitment to fostering innovative financing solutions for climate action in Africa. By harnessing the power of private sector investment and leveraging concessional funding, the initiative seeks to accelerate the transition towards a low-carbon, climate-resilient future on the continent. It also underscores the collaborative efforts between development finance institutions, impact investors, and regional entities to address the urgent climate crisis while unlocking new avenues for sustainable development.
As Africa grapples with the dual challenges of climate change and sustainable development, initiatives like the Class C Green+ shares offer a glimmer of hope. By mobilizing resources, fostering partnerships, and supporting innovative projects, the AfDB and TDB are paving the way for a greener, more prosperous future for the continent and its people.
