African climate venture builder Persistent is seeking to raise $100m for a new fund to back early-stage start-ups, managing partner Tobias Ruckstuhl tells the Africa Report
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African climate venture builder Persistent is seeking to raise $100m for a new fund to back early-stage start-ups, managing partner Tobias Ruckstuhl tells the Africa Report
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Financial instruments supporting mangroves and forestry are under consideration by members of the African Natural Capital Allliance (ANCA), an executive at the organisation has said.
ANCA is in conversation with financial institutions looking to create innovative instruments that support mangroves and forests, according to Dorothy Maseke, head of ANCA’s secretariat.
“ANCA and FSD Africa are looking towards supporting a number of specialised financial instruments in mangroves and forestry,” Maseke told Carbon Pulse.
These could combine elements of bonds, guarantees, and insurance, she said. Established in 2022 by non-profit FSD Africa, ANCA is an African-led initiative whose members – including the likes of Standard Chartered, KCB, and Equity Bank – together manage assets of $390 billion.
Conservation bonds could be a key area of expansion for ANCA members, Maseke said.
“The discussions on opportunities are real. We are doing a lot in terms of connecting our partners, to support them on this journey, because many are interested. They just don’t know where to start,” Maseke said.
Regulation needs to change to support conservation-related bonds as “capital market structures in Africa do not necessarily support them,” she said.
“When the regulator supports capital market structures that will support this kind of investment, then it gives financial institutions, investors, and private equity the confidence to put their money on the table,” she said.
“It also enables fund managers or advisory firms to actually develop these bonds. Those are some of the things that ANCA will be pushing for.”
The only conservation-related bond on the continent to have been issued so far was the World Bank’s ‘rhino bond’, a $150 million issuance in 2022 in support of black rhinos in South Africa.
Development agencies and small project owners are driving discussion on the topic of biodiversity credits in Africa, another novel way of financing nature, Maseke said.
“Those developers who for years have been working on small projects, now all of a sudden are starting to pay attention,” she said.
“You may find some financial institutions who decide to develop the [biodiversity] credits market. Some may want to put up a biodiversity credits exchange.”
When governments drawing up nature strategies turn to private financing, they will eventually begin to work with these smaller actors on biodiversity credits, she predicted. “At some point, they’re going to converge. In some countries, they’re already converging.”
“Strong discussions” about biodiversity credits from market actors in countries including Rwanda, Ghana, Kenya, and nations around the Congo Basin are underway, she said.
“Kenya wants to go into the green economy and the bioeconomy is a key part of that. There’s a whole discussion of bioeconomies from biodiversity-rich African nations. Building a bioeconomy is the next frontier.”
However, lessons on biodiversity credits have been learned from the carbon credits market, she said. “It’s still a developing concept. It’s also coming on the backdrop of very negative press from the carbon credit side.”
“There’s still a lot of research that needs to be done in terms of, is the African market ready to go fully into it? That needs to be done fast.”
One advantage a voluntary biodiversity credits market would have over its carbon equivalent is that the former already has Indigenous Peoples and local communities at the centre, she said.
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BFA Global, FSD Africa, and the International Union for Conservation of Nature (IUCN) have launched the Africa Blue Wave, a $1 million initiative to support tech startups.
The targeted startups will contribute to more sustainable livelihoods and use of ocean and water resources. This initiative, made possible through funding from FSD Africa and the Canadian Government, builds on TECA’s (Triggering Exponential Climate Action) expertise in fostering blue innovation over the last year through a successful pilot wave supported by FSD Africa.
The Africa Blue Wave will support high-potential individuals who demonstrate a passion for addressing climate issues in Africa’s blue economy. It will be implemented by TECA, an initiative of BFA Global, with support from OceanHub Africa.
The wave will recruit 40 innovators from Kenya, Tanzania, Comoros, Madagascar, and Mozambique. Selected participants will receive support in the form of mentorship, guidance from industry experts, networking opportunities, and initial capital investment. This can help them build and bring their climate and ocean solutions to market. At the end of the wave, participants will have the opportunity to showcase their solutions and pitch their businesses to investors, potential partners, and industry leaders to secure additional support and investment.
“As we embark on the Africa Blue Wave, we carry with us the invaluable lessons learned from our inaugural wave. These insights will be the cornerstone of our commitment to making this new wave bigger, better, and more impactful than ever before. We’ve demonstrated that solutions can be homegrown by local talent, and I am excited to work with innovators to create more solutions that contribute meaningfully to local and global climate challenges.” Shirley Mburu, TECA Program Director, BFA Global
“The initiative aims to invest in Africa’s young innovators to catalyse solutions to address ocean challenges and achieve sustained ocean health across five priority seascape areas in Comoros, Kenya, Madagascar, Mozambique and Tanzania. Our long term goal, as envisaged in the Great Blue Wall initiative, is to transform coastal economies into drivers of positive conservation and socioeconomic development. We commend and greatly support Africa’s leadership and efforts in accelerating the development of a regenerative blue economy on the continent,” Thomas Sberna, Regional Head, Coastal and Ocean Resilience, IUCN Eastern and Southern Africa.
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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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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
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
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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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.
Mark Napier, CEO of FSD Africa, a specialist development agency, says the objective of the Association is to accelerate the adoption of alternative investments, particularly investments that focus on the green economy.
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.
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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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”.
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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