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How to finance the energy transition or even adaptation projects? How to develop green finance on the continent? Here are two major issues that will be discussed at COP27, which opened in Egypt. And in this area, banks and development agencies have their role to play.
Program for the Niger basin, solar energy program for the Sahel, wind power program in Kenya… The African Development Bank’s portfolio is oriented towards sustainable development projects, but also with regional impacts, explains Dr. Al-Hamndou Dorsouma, the acting director of the Climate and Green Growth department at the AfDB.
We have mobilized resources of more than 500 million dollars, but the objective is to go beyond that because we know that the needs in Africa are enormous. We are essentially putting co-financing on the table. So, with the institutions we work with and we go together with these institutions to windows such as the green climate fund and mobilize large-scale funds to have more impact.
Reflection is also progressing in the agencies. In addition to financing sustainable projects, AFD provides technical support to help governments choose their energy mix, explains Thomas Mélonio, AFD’s Director of Innovation, Strategy and Research.
We have developed at AFD a capacity to model both environmental impacts, but also the social and economic consequences in order to work on them at the same time. We had an example of a research project in Côte d’Ivoire which looked not only at the price of electricity, but also at the cost to the government of importing coal, for example, or gas which is produced nationally, or solar to also bring into the equation not only the price of electricity, but also the impacts of imports, the employment content, the impact for the State budget.
It is also a question of greening its own financial instruments. The AFD has tackled it, assures Rémy Rioux, its director.
Half of our funding last year was green or sustainable. We are the first French institution to have issued a green bond. It was in 2014. The first in 2020 to have issued an SDG bond – sustainable development objective – and the commitment I made to Parliament is that over the next 3 years, I hope, the entire AFD’s financing is green and sustainable, so that we are the first financial institution to finally do so and to show that it is possible. And to be rewarded, I hope, by the financial market for financing so many quality projects and inspiring, I hope, other players.
Today, 90% of climate finance in Africa comes from public resources and mainly from development actors.