malvernmugadzikwa
Business Writer
Africa offers the private sector trillion-dollar investment opportunities in climate and green growth sectors, according to the latest report by the Africa Development Bank (AfDB).
These opportunities range from climate-smart and low-carbon technologies to energy-efficient buildings, climate-resilient infrastructure, improved dryland agriculture crop production, or electric vehicles.
However, demand- and supply-side barriers continue to inhibit the full potential of private investments, the bank said in its African Economic Outlook report for 2023.
These bottlenecks include, among others, the lack of green growth and long-term strategies or their effective implementation, weak regulatory structures and institutions, perceived high investment risk profile, and lack of bankable project pipelines.
Private climate finance flows in Africa—at US$4,2 billion between 2019 and 2020 are six times lower than US$25,3 billion mobilized under the public climate finance program.
“By contrast, US$242,4 billion are needed on average annually until 2030 – US$2,7 trillion in total – to implement African countries’ latest submitted Nationally Determined Contributions (NDCs),” the bank said.
“To close the prevailing Africa’s climate financing gap by 2030, approximately US$213,4 billion is needed to be mobilized annually from the private sector to complement already-strained public resources.”
Private investments need to increase annually by about 36 percent from their current level to reach this objective, said the bank while several transformative policy actions can be leveraged to mobilize more private sector financing for climate and green growth in Africa.
These include, among others, the development of green growth and long-term strategies that clearly set up regulations, standards, and policies to guide potential investors.
Strengthening domestic financial institutions, tapping into the expanding global and domestic private equity and venture capital appetite for African markets, and cautiously engaging with the emerging carbon markets and debt-for-climate swaps are also options to explore.
While Africa is the least emitter of carbon emissions, it is the most vulnerable continent and has in recent years been experiencing extreme weather conditions including floods, and climate change-induced droughts.
Bongani Ndlovu