Category: News

Project accelerator launches to drive investments in African biodiversity

A group of five companies and organisations has launched an accelerator to attract investment in high-quality biodiversity projects across Africa, with a first call for proposals open until late next month.

Biodiversity Investments – Researcher & Accelerator (BIRA) will be hosted by the African Leadership University School of Wildlife Conservation and co-funded by global entrepreneur firm Dalberg and FSD Africa Investments, with contributions from biodiversity specialist firms CreditNature and Xilva.

The initiative will work to develop ecosystem measurement frameworks suited to the African reality, including user-friendly investor metrics, as well as offer grants to organisations that provide comprehensive assessments and monitoring systems to understand the environmental impact of pipeline companies, according to Dalberg’s website.

“Further, BIRA will engage investors through the grant which will be used to co-develop financing propositions and facilitate investment memoranda and marketing to promote credits,” it said.

“Through such a structured approach, the funding can prepare project developers to be investor ready whilst developing a pipeline of biodiversity deals in Africa and attract investors to the sector.”

In a comment on LinkedIn, CreditNature CEO and founder Cain Blythe said BIRA has been designed to “develop a credible approach to accelerating biodiversity and ecosystem measurements as a core offering for investable nature-based solution projects in Africa”.

One of CreditNature’s contributions to BIRA will be to apply its Natural Asset Recovery Investment Analytics (NARIA) framework.

“We’re offering African projects a high integrity, science-based, and scalable approach to measuring ecosystem integrity,” said Blythe.

“For projects in Africa, this means setting robust ecosystem baselines and forecasting unique recovery and rewilding strategies, all while preparing for potential investors.”

BIRA will be accepting applications for its first round of grants until Oct. 20, without specifying the amount available.

“Applicants must have biodiversity projects in Africa, have completed a business plan or feasibility study, and look to attract investors/buyers,” Dalberg said.

“BIRA will support select projects in conducting assessments of their biodiversity impact and investor readiness, and it will help showcase investor-ready projects to potential funders.”

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The African Leaders Nairobi Declaration on Climate Change and Call to Action

PREAMBLE

We, the African Heads of State and Government, gathered for the inaugural Africa Climate Summit (ACS) in Nairobi, Kenya, from 4th to 6th September 2023; in the presence of other Global Leaders, Intergovernmental Organizations, Regional Economic Communities, United Nations Agencies, Private Sector, Civil Society Organizations, Indigenous Peoples, Local Communities, Farmer Organizations, Children, Youth, Women and Academia:and Government in the presence of global leaders and high-level representatives on 6 September 2023 in Nairobi Kenya

  1. Recall the Assembly Decisions (AU/Dec.723(XXXII), AU/Dec.764 (XXXIII) and AU/Dec.855(XXXVI)) requesting the African Union Commission to organize an African Climate Summit and endorsing the offer by the Republic of Kenya to host the Summit;
  2. Commend E Dr. William Samoei Ruto, President of the Republic of Kenya, and Chair of the Committee of African Heads of State and Government on Climate Change (CAHOSCC) for providing the political leadership of an African vision that simultaneously pursues climate change and development agenda;
  3. Commend also E Moussa Faki Mahamat, the Chairperson of the African Union Commission (AUC), for his dedication and commitment towards the convening of the Summit;
  4. Further Commend the Arab Republic of Egypt for the successful COP27 and its historic outcomes, particularly regarding loss and damage, just transition and energy, and call for the full implementation of all COP27 decisions;
  5. Acknowledge that climate change is the single greatest challenge facing humanity and the single biggest threat to all life on Earth, demanding urgent and concerted action from all nations to lower emissions and reduce the concentration of greenhouse gases in the atmosphere;
  6. Take Note of the 6th Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC), stating that the world is not on track to keeping within reach the 1.5°C limit agreed in Paris and that global emissions must be cut by 43% in this decade;
  7. Underscore the IPCC confirmation that Africa is warming faster than the rest of the world and if unabated, climate change will continue to have adverse impacts on African economies and societies, and hamper economic growth and wellbeing;
  8. Recognise that Africa is not historically responsible for global warming, but bears the brunt of its effects, impacting lives, livelihoods, and economies;
  9. Reaffirm the principles set out in the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement, namely equity, common but differentiated responsibilities and respective capabilities;
  10. Express concern that many African countries face disproportionate burdens and risks arising from climate change-related unpredictable weather events and patterns, including prolonged droughts, devastating floods, out-of-season storms, and wildfires, which cause massive humanitarian crisis with detrimental impacts on economies, health, education, peace and security, among other risks;
  11. Recall that only seven years remain to achieve the Sustainable Development Goals of the 2030 Agenda, and note with concern that 600 million people in Africa still lack access to electricity while about 970 million lack access to clean cooking;
  12. Further note that extreme weather events and changes in water cycle patterns are making it more difficult to access safe drinking water, resulting in about 400 million people in Africa having no access to clean drinking water and 700 million without good sanitation;
  1. Further recognise that African cities and urban centres are growing rapidly, and by 2050 would be home to over 1.0 billion people. Cognisant of the fact that rapid urbanization, poverty, and inequality limit planning capacities and other urban dynamics which increase people’s exposure and vulnerability to hazards and have thus turned cities into disaster hotspots across the continent;
  2. Concerned that despite Africa having an estimated 40 percent of the world’s renewable energy resources, only $60 billion or two percent of US$3 trillion renewable energy investments in the last decade have come to Africa;
  3. Reiterate Africa’s readiness to create an enabling environment, enact policies and facilitate investments necessary to unlock resources to meet our own climate commitments, and contribute meaningfully to decarbonisation of the global economy;
  4. Recognise that Africa’s vast forests, especially the Congo Basin rainforest are the largest carbon sinks globally, and the important ecosystem services provided by Africa’s vast savannahs, Miombo woodlands, peatlands, mangroves, and coral reefs, it is time that Africa’s natural capital wealth is properly measured by recognizing its contribution to reducing global carbon emissions;
  5. Further recognise the critical importance of the oceans in climate action and commitments made on ocean sustainability in multiple fora such as the Second UN Oceans Conference in 2022, and the Moroni Declaration for Ocean and Climate Action in Africa in 2023;
  6. Emphasise that Africa possesses both the potential and the ambition to be a vital component of the global solution to climate As home to the world’s youngest and fastest-growing workforce, coupled with massive untapped renewable energy potential, abundant natural assets and an entrepreneurial spirit, our continent has the fundamentals to spearhead a climate compatible pathway as a thriving, cost-competitive industrial hub with the capacity to support other regions in achieving their net zero ambitions;

Now hereby identify the following to be critical agendas for urgent collective action at the continental and global level:

  1. We call upon the global community to act with urgency in reducing emissions, fulfilling its obligations, honouring past promises, and supporting the continent in addressing climate change, specifically to:
      • Accelerate all efforts to reduce emissions to align with goals of the Paris Agreement
      • Honour the commitment to provide $100 billion in annual climate finance, as promised in 2009 at the UNFCCC COP15 in Copenhagen, Denmark
      • Uphold commitments to a fair and accelerated process of phasing down unabated coal power and phase out of inefficient fossil fuel subsidies while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towards a just transition.
  2. We call for climate-positive investments that catalyse a growth trajectory anchored in the industries poised to transform our planet and enable African countries to achieve stable middle-income status by
  3. We urge global leaders to join us in seizing this unprecedented opportunity to accelerate global decarbonization, while pursuing equality and shared prosperity.
  4. We call for the operationalization of the Loss & Damage fund as agreed at COP27 and resolve for a measurable Global Goal on Adaptation (GGA) with indicators and targets to enable assessment of progress against negative impacts of climate change.

In recognition of the scale, urgency and importance of these collective actions, we commit to:

  1. Develop and implement policies, regulations and incentives aimed at attracting local, regional and global investment in green growth, inclusive of green and circular economies;
  2. Propel Africa’s economic growth and job creation in a manner that reflects our commitments to the Paris Agreement and also aids global decarbonization efforts, by leapfrogging the traditional progression of industrial development and fostering green production and supply chains on a global scale;
  3. Focus our economic development plans on climate-positive growth, including expansion of just energy transitions and renewable energy generation for industrial activity, climate smart and restorative agricultural practices, and essential protection and enhancement of nature and biodiversity;
  4. Promote clean cooking technologies and initiatives as a just energy transition and gender equality for African rural women, youth, and children;
  5. Strengthen actions to halt and reverse biodiversity loss, deforestation, and desertification, as well as restore degraded lands to achieve land degradation neutrality; and implement the Abidjan declaration on achieving gender equality for successful land restoration;
  6. Strengthen continental collaboration, which is essential to enabling and advancing green growth, including but not limited to regional and continental grid interconnectivity, and further accelerating the operationalization of the Africa Continental Free Trade Area (AfCFTA) Agreement;
  7. Advance green industrialization across the continent by prioritizing energy-intense industries to trigger a virtuous cycle of renewable energy deployment and economic activity, with a special emphasis on adding value to Africa’s natural endowments;
  8. Promote investments in reskilling to unlock the human capital that will power for Africa’s inclusive green transition;
  9. Redouble our efforts to boost agricultural yields through sustainable agricultural practices, to enhance food security while minimizing negative environmental impacts;
  10. Contribute to the development of global standards, metrics, and market mechanisms to accurately value and compensate for the protection of nature, biodiversity, socio-economic co-benefits, and the provision of climate services;
  11. Finalise and implement the African Union Biodiversity Strategy and Action Plan, with the view to realizing the 2050 vision of living in harmony with nature;
  12. Provide all the necessary reforms and support required to raise the share of renewable energy financing to at least 20 percent by 2030;
  13. Promote the production of green hydrogen and hydrogen derivatives such as green fertilizer and synthetic fuels;
  14. Integrate climate, biodiversity and ocean agendas into national development plans and processes to increase resilience of local communities and national economies;
  15. Promote regenerative blue economy and support implementation of the Moroni Declaration for Ocean and Climate Action in Africa, and the Great Blue Wall Initiative, whilst recognising the circumstances of Africa’s Island States;
  16. Support smallholder farmers, indigenous peoples, and local communities in the green economic transition, given their key role in ecosystems stewardship;
  17. Identify, prioritize,  and  mainstream  adaptation  into development policy-making and planning, including in the context of Nationally Determined Contributions (NDCs);
  18. Build effective partnerships between Africa and other regions, to meet the needs for financial, technical and technological support, and knowledge sharing for climate change adaptation;
  19. Promote investments in urban infrastructure including through upgrading informal settlements and slum areas to build climate resilient cities and urban centres;
  20. Strengthen early warning systems and climate information services, as well as taking early action to protect lives, livelihoods and assets and inform long-term decision-making related to climate change risks. We emphasise the importance of embracing indigenous knowledge and citizen science in both adaptation strategies and early warning systems;
  21. Support implementation of the Africa Water Investment Programme (AIP), which aims to close the Africa water investment gap by mobilising US$30 billion by 2030;
  22. Enhance drought resilience systems to shift from crisis management to proactive drought preparedness and adaptation, to significantly reduce drought vulnerability of people, economic activities, and ecosystems;
  23. Further enhance our inclusive approach including through engagement and coordination with the children, youth, women, persons living with disabilities, indigenous people, and communities in climate vulnerable situations;
  24. Accelerate implementation of the African Union Climate Change and Resilient Development Strategy and Action Plan (2022-2032)

CALL TO ACTION:

  1. We call upon world leaders to recognise that decarbonizing the global economy is an opportunity to contribute to equality and shared
  2. We invite Development Partners from the global north and south to align technical and financial support to Africa for sustainable utilization of Africa’s natural assets for low carbon development that contributes to global decarbonization.
  3. To accomplish this vision of economic transformation in harmony with our climate needs, we further call upon the international community to contribute to the following:
    • Increase Africa’s renewable generation capacity from 56 Giga Watts (GW) in 2022 to at least 300 GW by 2030, both to address energy poverty and to bolster the global supply of cost-effective clean energy for industry.
    • Shift exports of energy intensive primary processing of Africa’s raw material back to the continent, to serve as an anchor demand for our renewable energy and a means of rapidly reducing global
    • Access to, and transfer of environmentally sound technologies, including technologies to support Africa’s green industrialisation and transition.
    • Design global and regional trade mechanisms in a manner that enables products from Africa to compete on fair and equitable
    • Request that trade-related environmental tariffs and non-tariff barriers must be subject to multilateral discussions and agreements and not be unilateral, arbitrary or discriminatory measures.
    • Accelerate efforts to decarbonize the transport, industrial and electricity sectors through the use of smart, digital and highly efficient technologies such as green hydrogen, synthetic fuels and battery storage.
    • Design industry policies that incentivize global investment to locations that offer the most and substantial climate benefits, while ensuring benefits for local communities.
    • Implement a mix of measures that elevate Africa’s share of carbon markets.
  4. Reiterate the decision 1/COP27 that states that global transformation to a low-carbon economy is expected to require investment of at least USD 4 – 6 trillion per year and delivering such funding in turn requires a transformation of the financial system and its structures and processes, engaging governments, central banks, commercial banks, institutional investors and other financial actors.
  5. We call for collective global action to mobilise the necessary capital for both development and climate action, echoing the statement of the Paris Pact for People and the Planet, that no country should ever have to choose between development aspirations and climate action.
  6. Call for concrete, time-bound action on the proposals to reform the multilateral financial system currently under discussion specifically to:
    • Build resilience to climate shocks, including better deployment of the Special Drawing Rights (SDRs) liquidity mechanism and disaster suspension clauses.
    • Re-channeling of   at   least   $100billion   of SDRs to Africa, including through institutions such as the African Development Bank which will be able to leverage the SDRs by three to four times. We also call for the formation of a group of SDR donors to expedite this re- channeling ahead of COP28.
    • Propose for consideration a new SDR issue for climate crisis response of at least the same magnitude as the Covid19 issue (US$650 billion).
    • Better leverage of the balance sheets of MDBs to scale up concessional finance to at least $500b per year.
    • Improve debt management, including:
      • the inclusion of ‘debt pause clauses’, and
      • the proposed expert review of the Common Framework and the Debt Sustainability Analysis.
    • Provide interventions and instruments for new debt relief to pre-empt debt default to:
      • extend sovereign debt tenor, and
      • include a 10-year grace
    • Decisively act on the promotion of inclusive and effective international tax cooperation at the United Nations with the aim to reduce Africa’s loss of US$ 27 billion annual corporate tax revenue through profit shifting, by at least 50% by 2030 and 75% by 2050.
      1. Put additional measures to crowd in and de-risk private capital, such as blended finance instruments, purchase commitments, partial foreign exchange (FX) guarantee and industrial policy collaboration, which should be informed by the risks that drive lack of private capital deployment at
      2. Redesign MDB governance, to ensure a “fit for purpose” system with appropriate representation, voice, and agency of all countries.
  1. Note that multilateral finance reform is necessary but not sufficient to provide the scale of climate financing the world needs to achieve 43 percent emission reduction by 2030 required to meet the Paris Agreement goals, without which keeping global warming to 1.5 degrees celsius will be in serious jeopardy.
  2. Further note that the scale of financing required to unlock Africa’s climate-positive growth is beyond the borrowing capacity of national balance sheets, or at the risk premium that Africa is currently paying for private capital.
  3. Draw attention to the finding that inordinate borrowing costs, typically 5 to 8 times what wealthy countries pay (the “great financial divide”), are a root cause of recurring debt crises in developing countries and an impediment to investment in development and climate action.
  4. We call for adoption of principles of responsible sovereign lending and accountability encompassing credit rating, risk analysis and debt sustainability assessment frameworks and urge the financial markets to commit to eliminate this disparity by 2025.
  5. Urge world leaders to consider the proposal for a global carbon taxation regime including a carbon tax on fossil fuel trade, maritime transport and aviation, that may also be augmented by a global financial transaction tax (FTT) to provide dedicated, affordable, and accessible finance for climate-positive investments at scale, and establish a balanced, fair and representative global governance structure for its management, with an assessment of the financial implications on socio- economic impacts on Africa.
  6. Propose to establish a new financing architecture that is responsive to Africa’s needs including debt restructuring and relief, and the development of a new Global Climate Finance Charter through UNGA and COP processes by 2025.
  7. We call for revaluation of the Gross Domestic Product of Africa through the proper valuation of its abundant natural capital and ecosystem services including but not limited to its vast forests that sequester carbon to unlock new sources of wealth for Africa. This will entail the use of natural resource accounting and development of national accounting standards.
  8. Note that the first Global Stocktake which will conclude at COP28 offers a pivotal opportunity to correct course by including a comprehensive outcome, both backward and forward looking.
  9. Resolve to establish the Africa Climate Summit as a biennial event convened by African Union and hosted by AU Member States, to set the continent’s new vision, taking into consideration emerging global climate and development issues.
  10. Resolve also that this Declaration will serve as a strong contribution from the African continent to the global climate change process including COP 28 and beyond.
  11. Welcome the pledges and commitments made at the Summit to a tune of USD 26 billion from Development Partners including the European Union, the United Arab Emirates (UAE) as COP28 President- Designate, the Government of the United States, MDBs, Philanthropic Foundations, and Private Sector, to support Africa especially in the areas of renewable energy and adaptation.
  12. Appreciate the efforts of the United Arab Emirates as the COP28 President-Designate in the preparation of COP28 and affirm Africa’s full support for a successful and ambitious outcome of COP28.
  13. Request African Union Commission to develop an implementation framework for this Declaration and to make Climate Change an AU theme for the Year 2025 or 2026.
  14. Thank the Government and People of the Kenya for successfully hosting the inaugural Africa Climate Summit, and the warm hospitality accorded to all delegations to the Summit.

In witness of which we the African Heads of State and Government assembled in the (venue) of the Kenyatta International Convention Centre in Nairobi now make this declaration in the presence of global leaders and high-level representatives on this 6th day September 2023, in Nairobi, Kenya

Kenya should stay the low carbon course for green economy growth

As delegates gather in Nairobi for the Africa Climate Summit, it is a good time to reflect on the implications of a changing climate and ecology for Kenya’s economy.

Climate change poses an existential threat to all of us, and if neglected, its destruction will not exempt economic indices and value chains, particularly in Kenya.

But there’s another Kenyan story to tell – one of great opportunity – if we intervene to defend ourselves against the ravages.

Innovative climate finance strategies that deliver locally-led and domestically financed climate and economic resilience, as well as the mobilisation of green investment, can drive the country’s green transformation agenda and position Kenya to benefit from sustainable economic growth.

It is an unjust but nonetheless indisputable fact that, though Kenya contributes less than one percent of global greenhouse gas (GHG) emissions, she remains highly exposed to the impacts of climate change.

However, global efforts to reduce GHG emissions present accelerated productivity and inclusion opportunities if Kenya maintains a low-carbon development pathway.

Indeed, the country’s progress in meeting the Nationally Determined Contributions (NDC) commitments has the potential to accelerate sustainable economic growth.

The ongoing reconfiguration of global supply chains as well as the continued expansion of green opportunities like carbon markets, have the potential to deliver unparalleled development impact.

Climate-positive investments and policies will contribute to growth and catalyse green sectors – which in turn can reduce operating costs, increase private sector revenues, create green jobs, and generate social benefits.

It’s worth remembering that policy and legislative frameworks that enable access to these pool finances to support implementation already exist.

Crucial to consider also is the fact that, over the medium term, a low carbon economy would improve Kenya’s trade balance and support foreign exchange stability measures, as well as lessen the country’s destabilising exposure to fuel price shocks and supply chain disruptions.

Additionally, the operationalisation of policies and regulations that support positive and urgent climate action will help deliver the government’s commitment to prioritise the lives and livelihoods of Kenyans.

Through the National Treasury, and supported by development partners, a raft of measures including the Green Fiscal Incentives Policy Framework, which seeks to steer Kenya towards a low-carbon climate-resilient green economic development pathway through fiscal and economic mechanisms (incentives and disincentives), will enhance mobilisation of climate finance from various sources to finance the NDC and NCCAPs.

These measures will support the country’s environmental exposure, support national climate change goals, and promote clean energy investments, as well as catalyse development.

The Climate Policy Initiative estimates that it will cost Kenya Sh6.7 trillion (U$ 65 billion) between 2020-2030 to implement mitigation and adaptation actions and strategies.

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Africa’s climate fight gets Sh9bn boost from UK

The United Kingdom (UK) has announced new funding to support more green projects in Africa.

UK Minister for Development and Africa Andrew Mitchell unveiled a Sh9 billion (£49 million) investment across Africa during his visit to Kenya to coincide with the inaugural Africa Climate Summit, which begins today.

President William Ruto in a group photo with delegates after the first session of Africa Climate Summit 2023 at KICC on September 4, 2023.
President William Ruto in a group photo with delegates after the first session of Africa Climate Summit 2023 at KICC on September 4, 2023.

New Pan-African Fund Managers Association to focus on green finance

The Pan-African Fund Managers’ Association (PAFMA) launched this week at the Africa Climate Summit aims to foster the adoption of alternative investments, with a particular focus on green finance.

The first day of the Africa Climate Summit in Nairobi saw the signing of an MoU marking the launch of the Pan-African Fund Managers’ Association (PAFMA), a new trade association bringing together fund managers from across the continent with backing from some of the industry’s most powerful players.

The five founding members of PAFMA are the Pension Fund Operators Association of Nigeria (PENOP); the Fund Managers Association (FMA) in Kenya; the Botswana Investment Professionals Society (BIPS); the Ghana Securities Industry Association (GSIA) and the Investment Management Association of Uganda (IMAU).

These national associations, which between them account for assets under management of over  $70bn, have established PAFMA in collaboration with FSD Africa, a specialist development agency working to build and strengthen financial markets across sub-Saharan Africa.

Championing alternative investments

The launch of PAFMA comes as the industry faces many challenges. These include historically low savings rates along with a scarcity of viable investment opportunities and the escalating environmental risks confronting the continent.

Recognising the prevalent dominance of government securities among the current investible assets managed by fund managers on the continent, PAFMA’s primary objective is to foster the adoption of alternative investments.

This includes a particular focus on green finance, a pivotal driver for bolstering various sectors of the economy. By championing these alternative investment avenues, PAFMA seeks to not only stimulate job creation but also enhance income generation.

Among its activities, PAFMA aims to spearhead localised research efforts and initiatives to enhance knowledge sharing and capacity building enabling fund managers to evaluate and make investments in regions and countries where they did not previously have a presence.

Serving as a proactive advocate, PAFMA will also offer policy insights and champion the interests of its members in both regional and international arenas as well as facilitating regular gatherings of fund managers from across Africa.

“What we need to have is a pan-African association of fund managers who can share ideas and then hopefully collaborate on actual transactions,” Mark Napier, CEO of FSD told broadcaster CGTN Africa.

“When there are so many billions of dollars under the management of these fund managers that are coming together under the new association, it could be a very powerful force. We want it to accelerate the investment figures made through these kind of entities by helping them share knowledge and build capacity in that way.”

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Africa is part of the solution to climate change, not just a victim

African and global leaders are gathering in Nairobi for the Africa Climate Summit which opens on 4 September.

Convened by President William Ruto of Kenya in conjunction with the African Union, the summit will address the urgency of marshalling resources to respond to the climate crisis, amid signs that we are entering unchartered territory.

This summit will also be about challenging the idea that African nations are solely victims suffering the impact of climate change, despite bearing little responsibility for it. Instead, the summit will aim to show all the ways that Africa can transform its economy by playing a major role in accelerating global decarbonisation.

Developing countries need access to energy, not access to fossil fuels

Underlying this is the growing realisation that we need to update our “vision” of growth and development, with its outdated assumption that economic growth must always depend on industries and practices which harm the planet.

As Ugandan climate justice advocate Vanessa Nakate has observed, “developing countries need access to energy, not access to fossil fuels”.

The possibilities for Africa and the world in an alternative, climate-positive growth path are immense. Africa is home to some of the world’s most potent renewable resources: its untapped renewable energy potential is over 50 times the world’s anticipated electricity demand by 2040. Importantly, in many African countries, solar energy can provide year-round electricity – making it a viable energy source even for industrial applications.

Moreover, because Africa contains relatively little in the way of established, highly-emitting industrial infrastructure, almost all newly generated renewable energy can be deployed directly towards greening local, regional and global economies. For example, Kenya already derives over 90% of its grid energy from green sources – and has only just begun to scratch the surface.

There is also a growing ecosystem of African start-ups using technology for green industries and processes across the economy, from clean cooking fuel to carbon capture and storage solutions. But these require risk capital and hands-on help to scale, attract further investment, and reach their potential. This was the thinking behind the partnership between FSD Africa Investments and Africa Climate Ventures – a new investment vehicle which aims to build Africa’s first “climate unicorns”.

Green Investment

Africa boasts some of the world’s greatest biodiversity, with massive natural mature carbon sinks consisting of forests, peatlands, mangroves, and 60% of the world’s remaining unused arable land. To realise global net zero by 2050, we need to protect our planet’s natural carbon sinks, make our consumption greener, and remove carbon from the atmosphere at a massive rate. More than any other region, Africa can rapidly scale these activities, providing immediate, diverse, and lasting climate benefits.

Uniquely among global locations, scaling up many of these opportunities in Africa does not require complex trade-offs, or painful transformations. In fact, the process could provide much-needed jobs for the continent’s youth, as well as desperately needed energy access and sustainable economic growth.

Many of these opportunities will offer healthy financial returns, if there is fair and equitable access to financial markets. But realising this opportunity will demand unprecedented levels of investment. Indeed, by developing its renewable potential for on-continent use, Africa could generate reliable electricity access for all Africans – including the nearly 600 million currently without any energy access – by 2030 whilst reducing total emissions associated with energy production by 80% and with 30% lower costs. However, this will require 40% more upfront investment.

So the need for finance and investment will need to be front and centre of discussions at the Africa Climate Summit. That means ensuring reforms to the global financial architecture take account of the climate crisis and addressing the factors that are restricting the flow of green finance. It also means recognising that the perceived higher riskiness of investments into green assets in developing countries requires a big increase in the availability of concessional and smart capital as well as greater financial innovation to address systemic barriers.

Africa is ready to play its part and, as this summit will show, it offers many opportunities for green capital investment. The rest of the world can accelerate and amplify this by partnering with, and investing in, the continent as well as supporting market building initiatives to ensure it has the capacity to absorb the capital needed. If they do so, then Africa and her young, dynamic population can truly play their role as global climate leaders.

James Mwangi is CEO of Africa Climate Ventures and Anne-Marie Chidzero is CIO of FSD Africa Investments.

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FSD Africa, PenOp Equate To Deploy Extensive financing

August 2,2023.

The Financial Sector Deepening (FSD) Africa Capital Markets has associated with the Pension Fund Operators’ Association of Nigeria (PenOp) to revitalize economic sustainability through mobilisation of extensive capital for private sector financing.

We develop Africa’s capital markets to increase the availability of long-term finance for economic development, to achieve a sustainable future for Africa’s people,” said Evans Osano, director, Capital Market at FSD Africa.

Osano gave the hint at the FSD Africa Capital Market Roundtable Series: Nigeria 2023 held in Lagos on Wednesday with the theme ‘Mobilising Patient Capital Via Innovative Financing Structures For Sustainable Development in Nigeria’.

Encouraging fund managers and partners to deepen participation, Osano said the country’s over $40 billion investible assets should be explored in developing the green economy as opportunities abound in infrastructure, housing, water, and power, among others.

He said environmentally friendly growth can improve access to food, services, create green jobs and boost incomes in new and existing sectors of the economy.

Osana said the transition towards carbon-neutrality and environmental sustainability will reduce the negative impacts of climate change among poor communities.

He said: “The traditional mindset is to say, I want returns for the level of risk I am taking and that is very simple and laid back, but given that we are operating in a context, an environment, we need to start thinking about how we can generate those returns and still contributing to solving the society’s problems.”

“How can I invest money that can also create jobs? That is impact investing. And impact is at the far end of the scale and we can start that journey. That is really what I am challenging the Nigerian institutions and investors to start thinking about.”

According to him, there is no point in getting a very high return and then one retires into an environment where if one falls sick, there is no access to medical care.

Oguche Agudah, chief executive officer of Pension Fund Operators Association of Nigeria, said: “What we need to do is to look at challenges facing us as a country in different ways and use the capital that we manage to tackle them in an innovative way.

“What needs to happen is for capital to be deployed in a manner that seeks to solve some of these challenges and for that capital to be deployed adequately in a way that compensates the capital providers for their risk, compensates them for their time, and also compensates the people who manage those funds. In this way, they will be incentivised to do it again and again and again.

“We need new sustainable models. We need new products, we need new mindsets, because the problems that are ahead of us are new. We also need to work together more closely in order to ensure that we have the society that we all crave for and that Nigeria can indeed be a beacon of hope to the rest of Africa.”

FSD Africa is currently implementing its initiative in over 60 projects in 33 countries across Africa including Ethiopia, Ghana, Kenya, Morocco, Nigeria, Rwanda, Tanzania, UEMOA, Uganda, Zambia, and Zimbabwe.

In Nigeria, FSD Africa Capital Market has initiated projects like the first African green bond, first certified corporate green bond in Africa, FMDQ – green bonds, and Infracredit Nigeria – guarantee and preparation facility (NSIA).

Mark Napier, CEO of FSD Africa, said the focus of his engagement with key actors in the Nigerian financial market is to significantly boost the role of the private sector in climate finance.

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United Kingdom Government reiterates commitment to Africa’s green industries

In line with the UK Government’s commitment to supporting clean, green and sustainable economic growth in Africa, UK Foreign Secretary James Cleverly visited a Nigerian e-mobility platform and electric vehicle assembler, MAX Nigeria.

 

With support from the UK-funded Manufacturing Africa programme, MAX raised $31 million to ramp up the assembly of electric two- and three-wheelers. MAX is now gearing up for a third capital raise, to fund its expansion to become a regional e-mobility player. MAX Nigeria has empowered over 21,000 drivers operating in 8 cities within Nigeria and has contributed to cutting 52 metric tons of CO2 emissions from the environment.

Manufacturing Africa’s team of McKinsey consultants conducted a market assessment of the electric vehicle value chain for MAX, contributing to their electric vehicle (EV) scale-up strategy. UK-linked financiers including Novastar (backed by British International Investment) and Shell Foundation are some of the organisations financing MAX’s growth. MAX has also found a UK business partner in Field Ready, to support them on recruitment.

Work with MAX is part of the UK’s support for economic growth, job creation and value-addition in Africa that aligns with global climate priorities.

British funds continue to support game-changing entrepreneurs and companies in Africa. British International Investment manages a $4.7bn investment portfolio in Africa, including 86 companies and 43 funds in Nigeria alone. Other funding sources include:

  • Infracredit, which provides local currency guarantees to unlock long-term infrastructure financing in Nigeria
  • FSD Africa Investments, which invests in order to improve the financial instruments supporting Africa’s green economic growth
  • the Climate Finance Accelerator, a public-private finance initiative that supports low-carbon projects

Importantly, the UK also provides support for companies to access investment, whether from the UK or elsewhere. The Manufacturing Africa programme is supporting 22 manufacturers to land investments in Nigeria, with a pipeline of $664m+ foreign direct investment (FDI). The programme supports over 120 companies across 5 countries in Africa, which are mitigating 239,000 tonnes of carbon dioxide, while creating 14,000 new jobs.

British High Commissioner to Nigeria, Richard Montgomery said: “I am delighted to visit MAX Nigeria with our Foreign Secretary James Cleverly. MAX are truly innovative and entrepreneurial, solving a thousand problems at once to bring affordable electric vehicles to West African riders.”

It is fantastic that a combination of UK public and private sector support is helping MAX to create jobs, bring new skills into the market, and solve climate change challenges. We will continue to support companies doing this groundbreaking work on the continent.

Chief Executive Officer and Co-Founder of MAX Nigeria, Adetayo Bamiduro said: “Our mission at MAX is to continue scaling the impact of our vehicle subscription platform across Africa and to deliver on our commitment to provide sustainable income to millions of mobility entrepreneurs by enabling them to access income-generating, energy-efficient, and electric vehicles that meet the essential needs of Africans.”

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FSD Africa, InfraCredit Invests £10 Million In Risk-Sharing Facility

FSD Africa in collaboration with InfraCredit has invested £10 million in a first-of-its-kind risk-sharing facility, Risk-sharing Backstop Facility (RSBF). The credit line is designed to unlock funding for sustainable infrastructure development in Nigeria.

With the increased accessibility of finance for climate-aligned infrastructure projects, the facility seek to accelerate Nigeria’s economic and social development as well as deliver on its climate goals.

In a statement, RSBF plans to mobilise short and medium-term local institutional investment into critical and climate-aligned infrastructure projects that have a reliable business model and are ready to expand but struggle with a higher perception of risk without this form of credit enhancement.

According to the International Monetary Fund (IMF), an estimated $3 trillion is required by Nigeria to finance its infrastructure deficit over the next 30 years. Despite the large amount of liquidity in the local market to fund a significant portion of this, infrastructure receives relatively little.

According to the statement, “The RSBF will address this perception of high risk by providing backstop support to investors alongside InfraCredit’s guarantees, thereby providing early-stage greenfield climate-aligned infrastructure ventures which are at a construction stage and too early for additional capital to be secured via a bond issue, with more time in which to start generating stable predictable cash flow and demonstrate their status as being long-term bankable.

“The current pipeline demonstrates the breadth and variety of projects this facility will support, with projects ranging from distributed renewable energy services for urban residences to commercial and industrial renewable projects, edge-certified green housing and e-mobility infrastructure. As part of any funding application all projects will be rigorously assessed on their environmental credentials.”

FSD Africa Invest (FSDAi) has disclosed that it is pleased to be undertaking this investment in partnership with an established player in the sustainable infrastructure financing space, InfraCredit – a business with a capitalisation of $209 million, and a series of AAA ratings from local rating agencies.

“Indeed, since its inception in 2017, InfraCredit has built an exemplary record supporting strategic Nigerian infrastructure projects, having written ₦145 billion (approximately $315 million) of guarantees underwriting bond issuances by eleven companies distributed across the power, transportation and logistics, ICT/telecommunications, gas to power, LPG clean cooking and input to infrastructure sectors. All of these issues have been fully subscribed, some by more than 160 per cent by domestic pension funds and insurance companies.”

FSDAi, which is backed by UK aid through the Foreign, Commonwealth and Development Office (FCDO) with a total capital base of $131 million, has a track record of backing innovation and being prepared to take risks to address financial market failures to bring about sustainable economic growth.

According to the statement, FSDAi’s £10 million investment in the RSBF is intended to galvanise finance and direct it to landmark infrastructure projects that will help create exponential economic, social and environmental benefits for Nigeria. This investment, therefore, aligns with one of FSD Africa’s primary objectives – developing capital markets by tackling blockages in the system.

It stated, “The facility has been carefully designed to support sustainable infrastructure initiatives which boast a reliable business model and are ready to expand but lack the necessary capital to do so. This delay or deferral of expansion projects due to unavailable capital creates a bottleneck that slows Nigeria’s progress towards solutions for some of the country’s most pressing, and transformational, infrastructure needs.

“The RSBF will raise funding in series, initially from FSDAi, but eventually from other funders, aiming to reach a total capital base of up to $50 million.”

Also, CIO of FSD Africa Investments, FSD Africa, Anne-Marie, stated that, “FSDAi’s partnership with InfraCredit on the bridge-to-bond facility introduces a de risking financing solution to mobilise short and medium-term local institutional investment into critically needed infrastructure projects that are currently considered un-bankable without alternative credit enhancement. Moreover, as Africa’s economies struggle to mobilise capital to develop key climate mitigation and sustainable power generation projects, this facility comes as a timely and much-needed intervention for Nigeria’s infrastructure landscape.’’

CEO of InfraCredit, Chinua Azubike, also expressed delight saying: “I am delighted to work with FSD Africa on an innovative facility which will support much needed but underfinanced projects realising their ultimate goals and purpose. Smart use of catalytic capital can dramatically increase the role of private capital and local intermediaries in investing in Nigeria’s sustainable infrastructure space and help the country develop responses to the significant challenges which confront it from the deteriorating environment and ecology to an unstable energy mix and severe social inequality.”

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