African Development Bank launches initiative for green infrastructure projects
The Alliance for Green Infrastructure in Africa (AGIA) will raise $500 million for project preparation and development, which will then be leveraged into a $10 billion fund to help African states build climate-resilient infrastructure.
The initiative will focus on impactful projects featuring greater cooperation between governments and private sector actors on a 3-6 year timescale.
Speaking at the launch event at Cop27, the crucial global climate conference in Sharm-El-Sheikh, Egypt, Akinwumi Adesina, president of the African Development Bank, argued that the fund “will not duplicate existing initiatives” but will instead focus on untapped green investments which he says have significant potential.
“AGIA will deploy its resources, partnerships, and instruments to green existing brown infrastructure in Africa. Examples include converting heavy fuel oil and diesel plants to gas hybrid to power industries, greening non-power infrastructure such as transport systems using compressed natural gas, capturing flared gas, and converting into liquified petroleum gas, gas-to-power, and manufacture of fertilisers.
“We see new opportunities for green asset recycling, as well as the development of green hydrogen, and large-scale renewable energy projects such as the $20 billion Desert to Power to provide electricity for 11 countries of the Sahel via solar systems. We also envisage infrastructure that will support new green industries, especially the development of lithium-ion batteries in Africa, to position Africa to benefit significantly from the electric car market which could be worth $354 billion in 2028.”
The need for green investments in Africa is acute. Out of the $623bn of green bonds issued in 2021, Africa accounted for just 0.26%, the lowest share of all regions of the world. Africa also accounted for just 1.9% of all green loans in 2021, and 1% of global issuances of sustainability bonds and sustainability-linked loans and bonds, according to the AfDB.
Tshepidi Moremong, chief operating officer of Africa50, said that the immediate focus is to “create a vehicle which develops bankable green and climate resilient infrastructure projects for Africa”.
Adesina also said that governments can play a new role in the green infrastructure ecosystem. “Governments have critical roles to play to promote green infrastructure investments in Africa. To create a conducive environment for private sector green finance investments, governments will need to establish domestic green banks and national climate funds. These can be used to mobilise blended capital for low-carbon, climate resilient development, address specific market needs, while also reducing reliance on external financing sources.”
Source: African Business