NAIROBI, Kenya, 10 January 2023 -/African Media Agency(AMA)/- Today pre-seed venture capital (VC) fund and accelerator Catalyst Fund announced a $2 million investment into 10 startups building solutions to improve the resilience of climate-vulnerable communities in Africa. This is the inaugural cohort of the new $30M VC fund of Catalyst Fund, anchored by financial sector development agency FSD Africa, aimed at supporting early-stage founders to develop technology that will make Africa more resilient to the impacts of climate change.
Each of the 10 startups will be offered $100K of equity investments as well as $100K of hands-on venture-building support.
These companies will join Catalyst Fund’s existing portfolio of 61 startups across emerging markets and receive capital, bespoke and expert-led venture-building support, and direct connections with investors, corporate innovators and talent networks that can help them scale. Catalyst Fund’s portfolio companies have raised over US$640 million in follow-on funding to date, and currently serve more than 14 million individuals and MSMEs globally.
“We are thrilled to have the opportunity to partner with ten groundbreaking African startups working to build a more resilient and sustainable future,” said Maelis Carraro, Managing Partner of Catalyst Fund. “Our goal is to back mission-driven founders that share our vision of a world where every individual has the tools and opportunities they need to thrive. From agtech to insurtech, waste management, disaster response, and carbon finance, these startups display finance, tech, and business model innovations that will help communities better adapt to climate impacts and grow their resilience.”
The ten companies joining this next cohort of Catalyst Fund are:
Agro Supply [Uganda]: a mobile layaway system that helps farmers save money gradually using their mobile phones and to cash out in order to purchase farm inputs such as hybrid (drought-resistant) seeds, from maize to sorghum, sunflower and soybean during the planting season.
Assuraf [Senegal]: a digital insurtech platform offering end-users access to a range of insurance products (e.g. agriculture, automotive, health, housing, natural disasters) from over 20+ insurance companies with a fully integrated claims management system.
Bekia[Egypt]: a tech-enabled waste collection solution enabling companies and households to exchange their waste (plastic, paper, electronics, metals, cooking oil) against a financial incentive paid on a digital wallet.
Eight Medical [Nigeria]: a cloud-native Emergency Medical Services (EMS) platform that provides on-demand urgent care when and where it is needed. This “911 for Africa” connects emergency medical responders on motorcycles to users in distress in 10 minutes or less, including for climate-induced crises.
Farm to Feed [Kenya]: a food supply chain company that is providing a digitally-enabled solution to food loss/waste. Their climate-smart solution focuses on providing a market for imperfect and surplus produce from farmers, contributing to food security and greenhouse gas emissions reduction.
Farmz2U [Nigeria, Kenya]: an agtech enterprise driving sustainable agriculture. Through Farmz2U, farmers can access personalized farming advice (especially on regenerative farming practices), affordable credit, quality and traceable inputs, and direct buyers for their harvest.
Octavia Carbon [Kenya]: the Global South’s first Direct Air Capture (DAC) company that is building the world’s lowest-cost DAC hub. Octavia is currently building DAC machinery to capture carbon from the air for resale as either carbon dioxide or carbon credits to off-takers.
PaddyCover [Nigeria]: works with established insurers and digital platforms to design and offer bespoke products via their platform that facilitates flexible insurance packages, including health, life and, in the future, index-based crop insurance. The offerings are built into the lifestyle touchpoints of the customer, either as a convenience or as complementary value-adds.
Sand to Green [Morocco]: transforms deserts into cultivable land using agroforestry methodology and a solar-powered desalination system to design climate-smart regenerative farms.
VAIS [Egypt]: a precision agtech startup committed to climate resilience and food security by providing data intelligence to farms via their FarmGATE application, which is powered by proprietary artificial intelligence/machine learning (AI/ML)-based virtual field probing (VFP) technology, to enable better use of water and other farm inputs to produce better yields.
“At FSD Africa, we believe that by harnessing the power of tech, and specifically fintech innovation, we can help to spur the development of climate resilience solutions for Africa, thereby helping deliver on COP27’s core themes of adaptation and implementation,” said Juliet Munro, Director of Digital Economy at FSD Africa. “These companies are strong examples of the innovation we need to enhance the resilience of vulnerable communities in across the continent.”
“COP27 in Egypt this year called for more private sector financing to fill the >$330B funding gap for adaptation and resilience by 2030. It also called for more local innovations to support communities in building resilience to climate impacts. The Catalyst Fund’s new cohort exemplifies what these innovative climate solutions for the most vulnerable could look like. We are also thrilled to be backing companies in Francophone Africa and Northern Africa for the first time. We intend to back many more startups like them across the African continent in the years to come,” said Aaron Fu, Partner at Catalyst Fund.
The Catalyst Fund is a pre-seed VC fund and accelerator backing high-impact tech startups that seek to improve the resilience of underserved, climate-vulnerable communities. We partner with mission-driven founders that share our vision of a world where every individual has the tools and opportunities they need to thrive.
Washington, DC, Dec. 14, 2022 (GLOBE NEWSWIRE) — The Health Finance Coalition (HFC), powered by Malaria No More, and AfricInvest today announced pledged commitments of $50 million for the pan-African Transform Health Fund, to finance the scaling of proven, innovative models that improve access, affordability, resilience, and quality of healthcare in Africa. U.S. International Development Finance Corporation (DFC), U.S. Agency for International Development (USAID), Royal Philips, Merck & Co., Inc., known as MSD outside of the United States and Canada, FSD Africa Investments, Netri Foundation, Anesvad Foundation, Grand Challenges Canada (with funding from Global Affairs Canada), Chemonics International, and MCJ Amelior Foundation have all announced their commitments, subject to final due diligence before closing. IFC is in the advanced stage of approving its investment in the fund.
The announcement was made as part of the U.S.-Africa Leaders Summit in Washington, D.C. hosted by President Biden. The Transform Health Fund is an innovative blended-finance fund focused on locally led health supply chain, care delivery, and digital solutions in Africa. The fund is a collaborative effort bringing together commercial, government, and donor investments under the leadership of AfricInvest, a leading pan-African investment platform active across private equity, venture capital and private debt, and the Health Finance Coalition, a group of leading global health funders hosted by Malaria No More, to finance enterprises that improve health system resilience and pandemic preparedness across the continent.
The Transform Health Fund will provide debt and mezzanine financing to scale high-impact health enterprises serving vulnerable communities, while offering risk adjusted returns. As a result, the Fund is expected to help bolster healthcare systems in Africa, which face a massive financing gap – a challenge made more difficult by COVID-19 – by working to achieve Universal Health Coverage (UHC).
The Challenge: Africa Faces a Massive Health Financing Gap
While Africa is home to 16 percent of the global population and 23 percent of global disease burden, just 1.6 percent of annual impact investments – now estimated at a market size of $1.16 trillion – target the healthcare sector in Sub-Saharan Africa. Small and medium enterprises (SMEs) are generally left out of this impact investment and the COVID-19 pandemic has made this gap even wider.
The Opportunity: Innovative Financing to Support African Healthcare
To respond to the critical healthcare financing gap in Africa while building a resilient ecosystem, the Transform Health Fund will target three critical areas serving low-income patients: supply chain transformation, innovative care delivery, and digital innovation. The Transform Health Fund investments will target countries across sub-Saharan Africa, with a focus on East, Southern, and Francophone West Africa.
“Three decades of expertise and insight allows AfricInvest to leverage a wide range of support throughout many regions of the continent,” said Ziad Oueslati, Founding Partner, AfricInvest. “We believe our team is well-positioned to continue financing African health-sector companies through innovative financing models such as the Transform Health Fund.”
“The Transform Health Fund will demonstrate that health enterprises serving the most vulnerable communities are investible,” said Martin Edlund, CEO, Malaria No More and Executive Director of the Health Finance Coalition. “To solve the health financing gap in Africa, we need to crowd in substantial private investment – this fund demonstrates a new model for achieving that while prioritizing transformative health impact.”
“Scaling proven solutions in Africa’s healthcare requires adequate investment and innovative financing,” said Noorin Mawani, Co-lead of the Transform Health Fund. “The Transform Health Fund seeks to apportion risk and return while delivering high impact-focused funding to healthcare businesses that need it most.”
“The Transform Health Fund demonstrates what’s possible when you combine a ‘capital stack’ approach to financing with a genuine commitment to transformational impact,” said Ray Chambers, WHO Ambassador for Global Strategy and Health Financing. “But to achieve the world’s ambitious global health goals, we need to urgently scale such efforts – especially as the world recovers from COVID-19 and faces serious macroeconomic headwinds.”
“Working together, we can build a stronger and more resilient healthcare system in Africa by strengthening regional supply chains, delivering care to underserved communities and leveraging the digital economy to provide innovative healthcare solutions,” said Makhtar Diop, Managing Director of IFC. “The rapid pace of innovation witnessed in the health sector provides an opportunity to leapfrog and we look forward to our collaboration with the Transform Health Fund to finance Africa’s health transformation.”
“Since our company’s founding, we have been committed to advancing global health and using the power of science to save and improve lives,” said Robert M. Davis, CEO and Chairman, Merck & Co., Inc. “Creative financing models like the Transform Health Fund can be effective tools to help enable greater access to health, and we welcome the opportunity to partner with like-minded organizations focused on strengthening health systems around the world.”
“DFC is proud to be one of the first supporters of Transform Health Fund whose mission is to invest to strengthen healthcare systems and supply chains across Africa,” said Lauren Cochran, Vice President of Equity and Investment Funds, U.S. International Development Finance Corporation (DFC). “This commitment is an important example of DFC’s work to expand access to quality healthcare services, build the private sector, and empower local communities.”
“As part of our ambition to improve the lives of 2.5 billion people per year by 2030 and in particular the health and well-being of 400 million people in underserved communities, we recognize the important role businesses can and need to play in unlocking financing for Universal Healthcare in Africa,” saidMarnix van Ginneken, Philips’ Chief ESG & Legal Officer. “The Fund’s innovative model positions private capital to co-invest and provide impact capital to innovative healthcare delivery models, including digital transformation which is essential to bridging the gap to underserved communities and increasing access to quality and affordable care.”
“We have seen from our work throughout Africa that transformative change happens when local leaders, innovators, and entrepreneurs have the resources, networks, and capital to bring their ideas and solutions to scale,” said Jamey Butcher, President and CEO, Chemonics International. “Chemonics is proud to support the Transform Health Fund, an investment vehicle that will do just that for healthcare in Africa.”
“We are delighted to partner with AfricInvest and The Health Finance Coalition in establishing an investment vehicle that has secured much needed private flows of finance for African healthcare,” said Anne Marie Chidzero, Chief Investment Officer, FSD Africa Investments. “The fund will back an emerging class of private health provision that will improve livelihoods for vulnerable populations. The future of health finance lies in bringing together different types of capital with a common purpose, something we are excited to back through our investment in the Transform Health Fund.”
The Swiss Re Foundation has announced a US$500,000 grant to spur innovation of insurance products for the underserved communities in Africa in the wake of rising risks.
Report noted that the funding, which will be distributed through FSD Africa’s supported BimaLab insurance accelerator programme, will help promising insurtechs to introduce and scale up innovative products targeting low-income groups, currently left out by existing insurance products.
“We acknowledge the role of the insurance sector in spurring the growth and development of the African continent. Through programmes such as BimaLab, the most vulnerable and low-income people will gain from the innovative, affordable and efficient insurance products and services,” said Stefan Huber Fux, director of Swiss Re Foundation.
The programme will help turn validated insurance-focused ideas to market and investor-ready and provide innovators with enabling regulatory environment for developing their ideas, according to the brief by the Foundation.
The foundation, started by Swiss Re in October 2011 to, among other goals, support innovations that boost societal resilience, had issued grants in 44 countries by 2021 and made $86.6m commitments between 2012 and 2021.
The Swiss Re Foundation grant will help define a path for scaling the BimaLab from three to ten countries, thereby allowing a deeper dive and creating a mechanism for continued technical support and funding.
Nigeria’s Vice President, Prof. Yemi Osinbajo, said Africa’s share of the global carbon market can be scaled up massively to reach foreign direct investment (FDI) of between $120 to $200 billion annually.
The Vice President stated this during his keynote speech at the Rockefeller Foundation meeting in New York.
He identified a combination of capital flows, job creation, and the avoidance of long-term climate destruction as critical drivers of African leaders’ interest in supporting this effort.
According to him, Africa currently has only a small share of the carbon market. He explained the importance of this projected carbon finance stream, saying:
“For a continent that needs $240 billion annually in mitigation investment alone, this carbon finance stream could be the difference between transitioning and not (transitioning). As all of us in this room understand well, the priorities of the African continent are not just to act decisively on the climate crisis, but to also create significant growth opportunities for our young and growing population.”
“The investment required to advance the energy transition in Africa is huge. World Bank estimates suggest that Africa needs $6.5 trillion US dollars between now and 2050 for mitigation action alone to keep temperatures below 2 degrees of warming.”
VP Osinbajo also highlighted that the carbon market pipeline could create 30 million jobs in the next decade, with the potential to create more than 100 million jobs through climate-aligned projects by 2050.
Africa’s carbon markets: During his speech, VP Osinbajo noted that the rapid progress recorded in Africa benefitted from the support of a very engaged Steering Committee with the United Nations, Global Energy Alliance for People and Planet (GEAPP), USAID, and a range of other public and private actors, which resulted in the successful launch of the African Carbon Markets initiative (ACMI) in Sharm-el-Sheikh, Egypt during the COP-27 event.
“The strong commitment and presence from fellow African leaders demonstrate the willingness and leadership of Africa. We already have 7 African countries (Burundi, Gabon, Kenya, Malawi, Mozambique, Nigeria, and Togo) signed up to develop country carbon activation plans and over $200 million in advanced market commitments, which we must continue to further advance as this is going to be the critical driver of action on the continent.”
“I think it’s an auspicious moment for Africa to be participating more fully in the global carbon market conversation, especially in the light of the slowing pace of green investment flows into the continent. The work several of us have done together in the past few months makes it clear that while other sources of flows are slowing down globally, carbon markets are growing rapidly,” Osinbajo said.
Advancing carbon markets: VP Osinbajo also spoke about the essence of collaborations in developing carbon markets on the continent. He said collaboration is a key to unlocking opportunities in Africa’s carbon markets. He said:
“One of the strong points of ACMI and the way we must structure it going forward, in terms of governance, is the flexibility to smoothly work with other initiatives, and there will be many others. Two days before the opening of Cop 27, Senator John Kerry and I had a conversation about the proposed Energy Transition Accelerator and we both agreed that once the details were worked out, we would work out a collaborative framework with ACMI.
“Carbon markets will play a critical role in the implementation of this (Energy Transition) Plan – in mobilizing the capital required to move to our net-zero economy-wide trajectory. I want Nigeria to have the first Carbon Markets Activation Plan.”
In his contribution, the US Presidential Envoy on Climate Change, Senator John Kerry, commended VP Osinbajo for his leadership on the issue of energy transition. Kerry said:
“We are grateful for the leadership of the VP, grateful for the reception you gave me on my visit to Nigeria. I am honoured to share the platform with you on how to move the African Carbon Market Initiative (ACMI) forward.
“It is possible to create a high-integrity carbon market in a way to address Climate Change and African Development aspirations. We are all joined together looking forward to developing the financing.”
In case you missed it: The ACMI is a new initiative that was launched during the conference of parties (COP 27) event held in Egypt. The ACMI will be led by a fourteen-member steering committee of African leaders, CEOs, and carbon credit experts. The ACMI aims to dramatically expand Africa’s participation in voluntary carbon markets.
A new report has pinned the overall value of nature markets at a huge $10tr – but will it cut through with decision makers at COP15?
The launch of the UN biodiversity talks in Montreal this week has prompted yet another report that attempts to put a financial value on the services nature provides to the global economy.
The, study published by the Taskforce on Nature Markets group this morning, pins the value of”nature markets” at almost $10tr a year, a figure which amounts to roughly 11 per cent of global GDP.
The report, produced with help from McKinsey sustainability analysis outfit Vivid Economics, identifies two dozen markets that are explicitly base on the valuing and trading of nature, ranging from emerging markets such as carbon and biodiversity credits and nature liability insurance to more established markets such as conservation, nature-related tourism, and soft commodities.
The findings were framed by NatureFinance, the group behind the task force, as proof of the need to enhance governance of these so-called nature markets through cross-jurisdictional governance and regulation. The group has warned that embedding rules and incentives in these markets that protect nature are in the interest of the global economy, noting they are likely to lead to improvements on the bottom line for both public and private sectors.
The findings add to a library of reports published recently that have sought to either put a price on nature’s services or highlight the economic benefits they bring and the risks associated with their destruction. NatureFinance analysis is notable, because it specifically explores the role nature plays in the trajectory of 24 specific markets, from agricultural and livestock to nature-based carbon credits.
Jason Eis, executive director of Vivid Economics, said the findings highlighted the need to ensure that governance of these markets benefits nature. “The key is market governance and market infrastructure including features like rules of trade, product and certification standards, taxes and subsidies which could potentially help drive incentives for companies to support nature in responsible ways,” he said.
The Global Biodiversity Framework (GDF) under discussion at COP15 sets out a number of measures around how global systems of governance and finance can be reformed to better protect nature and close a massive $700bn annual biodiversity financing gap by 2030. Target 14 calls for biodiversity values to be integrated into policies, regulations, planning, development processes, poverty reduction strategies, accounts, and assessments of environmental impacts at all levels of governance. This integration of nature into policymaking dovetails with the aim of Target 19 in the draft text, which calls for a rapid acceleration in both public and private finance towards nature conservation and remediation, in particular in the Global South.
Simon Zadek, co-lead of the Taskforce Secretariat and executive director of NatureFinance, said it was critical that funding for biodiversity was not limited to foreign aid. “By redesigning nature
markets to include nature positive instruments and policies in their governance, we can include a broader array of financial tools and move beyond Official Development Assistance (ODA) as the principal source of biodiversity funding,” he said. “We have a unique opportunity to reshape the core logic of these markets so that nature positive, net zero and equitable outcomes are built into the way they operate.”
The start of the COP15 Summit this week has also been accompanied by the launch of a number of new products designed to help companies and investors track and reduce their exposure to nature-related risks or quantify the benefits generated by nature-positive investments.
For example, a new ratings agency launched by the African Leadership University’s School of Wildlife Conservation (ALU’s SOWC), consultancy firm Dalberg, and FSD Africa Investments is aiming to help investors measure, rate, track and communicate the positive impacts their investments have on biodiversity.
The new Biodiversity Investment Rating Agency is set to advise investors on identifying the opportunities for impact investing in biodiversity-related projects, spotlighting relevant frameworks to measure biodiversity investment impacts. “Institutional investment in biodiversity as an asset class will be the key to unlocking the billions of private capital we need to address climate change and promote the business of conservation,” said Mike Musgrave from the SOWC.
Anne-Marie Chidzero, CIO at FSD Africa Investments, said the Biodiversity Investment Rating Agency would “help investors measure and track the impact of their capital on biodiversity conservation and restoration will play a central role in increasing investment in the sector”.
Meanwhile, British start-up NatureMetrics has this morning announced the launch of a new nature performing monitoring service for companies, designed to help them continually monitor their impact on nature.
“By launching the world’s most accurate nature performance monitoring system, companies across the globe will have one simple-to-deploy tool, enabling them to understand, track and improve their natural capital,” said Katie Critchlow, CEO of NatureMetrics. “Through cutting edge environmental DNA technology, we’ve devised a way of turning complex nature data into simple and meaningful metrics to inform board room level decisions for business and nature.”
Attempts to measure and price nature remain controversial in some quarters, and the surge of new products and reports that frame nature as an asset class or cluster of markets will be met by criticism from some green groups as the talks get underway in Montreal. Some campaigners have long argued that appealing to companies and countries’ financial self-interest panders to the root cause of the destruction of nature – the pursuit of economic growth. There is also a debate around whether the focus on environmental risk disclosures and measuring natural capital is inadvertently helping companies to defer actions that can deliver a more nature-positive world.
The counterargument, of course, is that quantifying nature’s services can drive change rapidly and at scale, because translating natural assets into financial terms will inevitably hit home with governments and in boardrooms. There is also strong sense among companies that the introduction of nature risk reporting into financial accounts is an important first step in their journey towards becoming nature-positive operations and giving investors insights they need to divert capital towards greener businesses. More than 300 companies have expressed their support for any deal reached at COP15 to include rules that would make nature risk reporting mandatory at large companies and financial institutions.
At any rate, NatureMetrics headline $10tr figure for the value of nature markets is clearly designed to shock governments and businesses assembled at COP15 into delivering a deal that can secure future economic growth by protecting nature. Delegates should take note.
The grant is to be channeled through FSD Africa’s BimaLab accelerator programme to boost innovation in the sector.
Nairobi, November 30th, 2022 – Swiss Re Foundation has announced a USD 500,000 grant for Africa’s insurance sector to spur innovation of insurance solutions for the underserved. The funding, to be distributed through the FSD Africa’s supported BimaLab insurance accelerator programme, will unlock and accelerate the transformation of Africa’s insurance sector through innovative offerings for the sector’s unique landscape.
Recently, there has been increased attention to Africa’s expanding and promising insurance sector. At the COP27 Summit, over 85 African insurers pledged to create a financing facility to provide $14 billion to support communities impacted by climate change. The cover will help the continent’s most vulnerable communities deal with climate disaster risks such as floods and droughts, cementing the insurance industry’s position in driving the continent’s economic expansion.
Despite its massive potential, research by Brookings Institute indicates that Africa’s insurance sector has a low penetration of 2.78% compared to the global average insurance penetration rate of 7.23%.
Low awareness and low employment levels in the formal sectors, coupled with a lack of trust and experience with traditional insurance institutions, have been attributed to low penetration rates.
To harness the opportunities presented by the insurance sector, FSD Africa, with its partners, launched the BimaLab accelerator programme in 2020. The programme provides resources needed by talented insurtech founders of early to mid-stage start-ups to leverage insurance technology and promote insurance penetration in the continent.
The BimaLab program now in Kenya, Ghana and Nigeria has enabled 40 insurtechs to gain visibility and push for resources to scale their innovations. So far, 43 unique products and services have reached over 600,000 customers since the program started in 2020.
Plans to launch the BimaLab Accelerator Programme in Ethiopia, Uganda, Rwanda, Zimbabwe, Malawi, Egypt, and Morocco are underway.
The support of the Swiss Re Foundation will further facilitate the growth of high-impact insurtechs through introducing and scaling innovative products and services to the underserved African market.
Commenting on the new grant, Kelvin Massingham, Director of Risk and Resilience, FSD Africa, said: “The importance of the insurance sector to alleviate the challenges of today cannot be understated. While the African continent continues to report low insurance uptake, there are numerous opportunities for innovators in insurance. We are optimistic that through the grant, the underserved communities will soon start enjoying the safety net provided by insurance from many external threats like natural disasters, health threats, and economic disruptions.”
Elias Omondi, Senior Manager of Risk Regulations at FSD Africa, said: “The support of the Swiss Re Foundation is a significant step towards building an innovative and climate-focused insurance industry that will accommodate the evolving needs of the uninsured.”
Stefan Huber Fux, Director of the Swiss Re Foundation said “We acknowledge the role of the insurance sector in spurring the growth and development of the African continent. Through programmes such as BimaLab, the most vulnerable and low-income people will gain from innovative, affordable, and efficient insurance products and services.”
AFRICA needs to mobilise a staggering US$170 billion annually in long term financing to develop infrastructure key sectors, agriculture included to accelerate growth dwarfed by the COVID 19, conflicts and climate change.
Faced with an overarching ‘debt overhang’ buffeting many of the continent’s 54-member states, the African Development Bank is dangling two options; float Green Bonds on security markets or entice cooperating partners to secure finance and close the continent’s current annual US$108 billion infrastructure financing deficit to close the gap.
The AfDB in noting Africa’s infrastructure predicament amid the crisis that linger over the continent with lust to integrate and industrialise and make it competitive in intra and international trade practices has two immediate options to use capital market instruments or draw donors to the table.
Africa’s predicament has further been heighted by geopolitical influence and‘ a debt overhang’ that hinder the attainment of the much-espoused sustainable development in all growth sectors including agriculture, SMEs, among others, hence the need to stimulate financing options.
Officiating at the three-day- 2022 African Long Term Finance Workshop dubbed: “Financing Africa Sustainable Development in Times of Global Headwinds” in Lusaka, AfDB’s country Manager-Zambia, Raubil Olaniyi Durowoju believes the funds can be mobilized to create ‘resilient infrastructure’ and enhance sustainable growth in key sectors in its 37-member states.
In 2019, the Pan African financial institution had in collaboration with Germany Cooperation (GIZ) GmbH, Financial Sector Deepening Africa (FSD) Africa and the Making Finance Work for Africa (MFW4A) sought to improve intermediation of LTF on the continent by strengthening knowledge generation and dissemination through the creation of a database and scored board to act as comparative indicators of the level of development for the fund.
The diagnostic efforts so far undertaken in three countries, Cote d’Ivoire, Ghana and Ethiopia as part of the market data intelligence, has however not been sustained for various administrative reasons although there is still zeal by the AfDB to sustain the research to determine the countries’ capabilities.
However, the willingness of Central Bank across the member states to assist in data collection have raised hope to supplement AfDB’s efforts to attain the objectives of the LTF initiative and help capture an accurate hope to improve data collection picture on the continent, raising a ray of hope for the attainment of LTF.
Mr. Durowoju calls for the unlocking of the potential endowed in 37-member states to access LTF through the creation of credible databases through enhanced policy reform while striving to make the database creation as LTF ‘one -stop-shop as priority for the realization of the long-cherished dream.
“We the AfDB hope to improve data collection on the continent and strengthen the quality of available data, ultimately, we hope to encourage more dialogue between policymakers, governments and financial stakeholders to create a synergy that will provide solutions to our financing deficit and support African financial sectors and economies,”
And Zambia’s Central Bank Governor, Denny Kalyalya expressed the country’s unwavering desire to complement the data collection as sought by the AfDB and that the success of the LTF was vital for Africa’s quest to raise resources for infrastructure development to become resistant to climate crisis.
Dr. Kalyalya acknowledges the theme adopted at the Lusaka-three-day conference, propping a drive for LTF that has been endorsed by the Breton Woods institution-IMF for Africa to raise a staggering US$30-50 billion in additional funds per year for climate change adaptation through among other instruments, the Green Bonds, an alternative to debt accruals as it seeks to invest in infrastructure.
He acknowledges the risks associated with the climate change effects which has prompted policy makers to pay attention to the devastations and are actively taking steps to counter the effects.
The lingering effects of COVID 19 pandemic on world economies further serves to emphasis the unwavering need to raise LTF.
The heightening geopolitical unrest as evidenced in the Russia-Ukraine war and recent inflationary pressures have heightened economic uncertainty globally, de facto, limiting fiscal space on the continent.
The Lusaka-based Bank of Zambia realizes the need to partner in the data collection and compilation and foster the generation and disbursement of the would-be funds for the intended purposes, though regrets the slow pace at which the diagnostic process was undertaken-covering a paltry three countries, hopeful the exercise would be revisited and expedited to allow Africa raise LTF.
“The Bank of Zambia is pleased to take part in the significant project and I can confirm that the BOZ has completed all necessary steps to submit the requested data for 2022,” he said in a speech read on his behalf by Ms. Gladys Mposha, the director, Bank supervision
COP27 may be over but its impact will be felt for many decades to come.
Discussions highlighted nature’s pivotal role in tackling the climate crisis.
Here we reflect on 10 areas where progress is being made on climate action.
The implications of COP27 will likely be felt for decades to come, for better or worse. While a broad range of analysis has already been published on the ultimate outcomes of COP27, this summary includes reflections on how nature was the stand out topic at COP27 – here are the top ten takeaways.
1. Calls for structural reform of finance for nature and climate
It was impossible to pass a day at COP27 without having a conversation about finance – but finance means different things to different people. The breakthrough on loss and damage funding made the headlines, but this year there was much attention on structural reform of the financial system as well as the need to create innovative mechanisms that support nature and climate outcomes at national and ecosystem levels.
The Bridgetown agenda remained a central theme within these discussions. Before COP27, there was much focus on the need for financing adaptation measures – although in fact, very little progressed on this agenda from Glasgow. The multilateral development banks are also under scrutiny – sovereign bonds and sustainability-linked loans and bonds have been high on the agenda. Leading financial institutions from Japan to Norway to Brazil, all signatories to the Financial Sector Commitment on Eliminating Commodity-driven Deforestation have been moving forward with implementation through the Finance Sector Deforestation Action (FSDA) initiative.
FSDA members have published shared investor expectations for companies, and they are stepping up engagement activity and are working with policymakers and data providers. More broadly, the 10 point plan for financing biodiversity moved ahead at COP27 with a ministerial meeting between 16 countries representing five continents to set a pathway for bridging the global biodiversity finance gap – and looking ahead to the biodiversity COP15 in December 2020.
2. Biodiversity COP15 looms large
The biodiversity COP is usually a distant cousin to the climate COP, but in Egypt there was a considerable amount of attention on the need to create a “sister agreement” – a Paris moment for nature. The messaging that the climate and nature crises are deeply linked was made loud and clear at COP27.
On Biodiversity Day, the Paris climate champions urged leaders to step up action to address the accelerating loss of nature by delivering an ambitious biodiversity agreement at COP15 in Montreal. On the same day, more than 340 civil society leaders called on governments to prioritise the biodiversity COP, and a new survey from more than 400 experts from 90 countries revealed that a shocking 88% believe that the state of the world’s nature is “alarming” or “catastrophic and potentially irreversible”.
However, even though many countries were pushing for COP15 to be included in the COP27 text, the attempt failed – a disappointing outcome as net-zero emissions will not be enough to limit rapidly rising temperatures. Governments also need to halt and reverse biodiversity loss by 2030.
3. Strong signs of political will for forests
The creation of the Forest and Climate Leaders’ Partnership (FCLP), announced at the World Leaders’ Summit, is being driven by the reality that there is no time to lose when it comes to halt and reverse forest loss by 2030, with the intent to demonstrate success by COP28. The leaders of the 28 – and counting – FCLP member countries serve as key actors in the partnership, and its ultimate priority setters.
The FCLP will hold regular meetings, including leader-level moments at the beginning of climate COPs to encourage accountability. Starting in 2023, the FCLP will also publish an annual Global Progress Report that includes independent assessments of global progress toward the 2030 goal, as well as summarising progress made by the FCLP itself, including in its action areas and initiatives.
The presence of Brazil’s president elect, Luiz Inacio Lula da Silva, put a spotlight on the Amazon at COP27 – with Brazil promising to prioritise stopping deforestation and offering to host COP30 in three years’ time. Also, an announcement by Brazil, Indonesia and the Democratic Republic of Congo – made in Indonesia ahead of the G20 – signalled their intentions to work together to protect their vast swathes of tropical forests, earning the nickname “the OPEC of rainforests”.
This chart shows the total hectares of forest that have been destroyed in different countries. Source: Statista.
4. Implementation of forest pledges
Coming into COP27, there were clear signs that the global community is not yet on track to halt and reverse forest loss and degradation by 2030. Another UN-led report found that for 2030 goals to remain within reach, a one gigaton milestone of emissions reductions from forests must be achieved not later than 2025, and yearly after that, but that current public and private commitments to pay for emissions reductions are only at 24% of the gigaton milestone goal.
However, it wasn’t all bad news on the implementation front. Nature4Climate’s new joint commitment tracker found that 55% of the commitments tracked are demonstrating substantial signs of progress. There are also some bright spots to celebrate. For example, tropical Asia is on the path toward reversing forest loss by 2030: Indonesia’s deforestation rate dropped by 25% last year, and Malaysia also reported a fall of 24% in the pace of forest loss last year.
Forest pledges made in Glasgow at COP26 were also in the spotlight. In 2021, $2.67 billion was put towards forest-related programmes in developing countries – 22% of the $12 billion pledged at COP26, meaning that donors are on track to deliver by 2025. Private sector funds are also moving: for example, one year after launch, the IFACC initiative is scaling innovative financial mechanisms to help farmers without further conversion of the Amazon, Cerrado and Chaco ecosystems.
So far, commitments have risen from $3 billion to $4.2 billion and disbursements are expected to exceed $100 million this year. Similarly, the public-private LEAF Coalition has mobilised an additional $500 million in private finance, bringing a total of $1.5 billion in support of tropical forest protection. This is part of $3.6 billion of new private finance announced at the climate summit.
And exciting private sector initiatives worth noting include the launch of a new company Biomas (by Suzano, Santander, Itau, Marfrig, Rabobank and Vale) to restore 4 million hectares in the Amazon, the Mata Atlantica rainforest and the Cerrado. Also, 1t.org announced pledges from its first four Indian companies (Vedanta, ReNew Power, CSC Group and Mahindra) to join 75 other companies worldwide committed to planting and growing 7 billion trees in more than 60 countries.
5. Nature of negotiations
In the negotiations, nature-based solutions were included in the COP27 text for the first time, with forests, oceans and agriculture each having their own section. The Koronivia Dialogue – the track where food and agriculture is discussed at the UNFCCC – has finally been included in the text, but all eyes turn to COP28 for the focus required to truly transform food systems.
In the wonderful world of Article 6, things remain complex. Last year, at COP26 in Glasgow, countries decided on the basic framework of Article 6. Throughout 2022, countries have been focused on how to operationalise the Article 6 mechanism that allows countries to actually begin trading. In Egypt, the discussions were very technical – such as how registries are going to work, how countries will report on the trading, and what information should be submitted –with the aim of making things easy to track.
For nature, it was decided at COP26 that land use emissions were part of Article 6 – as it includes all sources and sinks. The focus in Egypt has been on article 6.4 – the mechanism for developing guidance on activities involving removals which includes reforestation, restoration, afforestation etc.
6. Technology meets nature
In a similar way to finance, “tech” gets everywhere at climate COPs, although historically that is not really the case when it comes to nature – not this year however. In Egypt, the need for high-tech solutions for nature and climate challenges was a constant refrain. The role of tech in improving transparency and accountability in monitoring supply chains (and tackling deforestation) and also in enhancing the integrity of carbon markets was evident everywhere.
Notable developments include Verra’s partnership with Pachama to pilot a digital measuring, reporting and verification platform for forest carbon. A new Forest Data Partnership was announced by WRI, FAO, USAID, Google, NASA, Unilever and the US State Department. WRI’s Land and Carbon Lab was on show demonstrating the new frontier of measuring carbon stocks and flows associated with land use.
Nature4Climate demonstrated a beta version of its new online platform (naturebase) to help decision makers implement natural climate solutions. And the new Global Renewable Energy Watch – a partnership between The Nature Conservancy, Microsoft and Planet – was also demonstrated. Capturing this emerging trend, Nature4Climate and Capital for Climate launched a report on the size and potential of the whole “nature tech” market that was discussed at an event in the Nature Zone.
7. Food finally arrives on the scene
Food was on everyone’s mind at COP27 in Egypt – but for the first time, it also made it onto the main agenda – being recognised in the final text and also with at least five event spaces solely dedicated to food and agriculture.
Important developments included the Food and Agriculture for Sustainable Transformation Initiative (FAST) launched by the Egyptian COP presidency – a multi stakeholder partnership to accelerate access to finance, build capacity and encourage policy development to ensure food security in countries most vulnerable to climate change.
Also related to food, 14 of the world’s largest agricultural trading and processing companies shared their roadmap to 1.5℃ – to mixed reactions – with detailed plans on outlining how they will remove deforestation from their agricultural commodity supply chains by 2025.
8. An increasingly blue COP
Observers have expressed encouragement at this being “an increasingly blue COP”, with the ocean called out in the final declaration and the first ever ocean pavilion in the blue zone. Several declarations reinforced the recognition of the fundamental role of the ocean in the climate system.
The critical role that Indigenous peoples and local communities (IPLCs) play as guardians of the forest is now firmly established and beyond question. At COP27, there was a polite but palpable frustration from IPLCs that climate funds are not reaching them. This massive deficit is increasingly being acknowledged by both by Indigenous and non-Indigenous actors, with a wide range of events dedicated to this topic.
While COP27 was a good space for Indigenous and non-Indigenous actors to share knowledge, to listen deeply to one another, to build relationships, it clearly can’t be the only space. While there are a number of encouraging signs of progress, including linking IPLCs with high-integrity markets, it’s clear the clock is ticking and IPLCs are getting impatient.
Clearly we must act with urgency, but it’s critical to take the time to build trust and mutual understanding, including absolute adherence to free, prior and informed consent protocols. This is necessary so that IPLCs can decide (or not) to participate in carbon markets with transparency, full understanding, and free consent. This takes time.
10. African-led initiatives take centre stage
While this was not the “African COP” that many hoped it might be, there were still a range of significant announcements coming out of Egypt that highlighted the continent’s potential as a natural capital powerhouse. These included the launch of the Africa Carbon Markets initiative, the Declaration for the Africa Sustainable Commodities Initiative, the launch of a $2 billion African restoration fund, a funding boost for Africa’s visionary Great Green Wall initiatives, and the announcement by the Global EverGreening Alliance and Climate Impact Partners of a new partnership to up to $330 million in community-led removal programs across Africa and Asia.
The Ghana Stock Exchange (GSE), in collaboration with the Securities and Exchange Commission (SEC), has launched new rules to guide the listing and trading of green and sustainable bonds on the market.
Dubbed the Green and Sustainable Bond Rules, the launch of the new guidelines formed part of activities to mark the 32nd anniversary of the local bourse which is being celebrated on the theme: “Investing into a green and sustainable future.”
Green bonds are bonds that support new or existing projects to generate climate or other environmental benefits that conform to green guidelines and standards.
Sustainable bonds on the other hand support new or existing projects that generate both environmental and social benefits that conform to the sustainability guidelines.
The first green bond was issued in 2007 by the European Investment Bank under the label Climate Awareness Bond. Due to the role the finance sector plays in allocating capital efficiently, it remains a key channel for economies all over the world to make a real impact.
As such, the best way to combat climate change while still making profit is through the financial market.
In his keynote address at the launch, the Regional Industry Director for Financial Institutions Group, Africa of the International Finance Corporation (IFC), Aliou Maiga, commended the GSE for showing leadership in green and sustainability finance.
He said climate financing was not only a development imperative but also a significant market opportunity.
“IFC is committed to working with Ghana’s stakeholders to facilitate investments that reduce greenhouse gas emissions and support climate change adaptation,” he stated.
Well timed
Also at the launch, the Director General of the Securities and Exchange Commission, Rev. Daniel Ogbarmey Tetteh, said investing in green and sustainable future was both well timed and opportune.
He said sustainability was a broader topic that hinged on social, human, economic and environmental pillars, none of which could be ignored.
“It is the most pressing challenge of our time for many business leaders. However, there is evidence of a correlation between the long-term success of a business and sustainability.
“Investors across the world are demanding opportunities to invest in companies or investments with strong Environmental, Social and Governance (ESG) markets,” he stated.
For his part, the outgoing Managing Director of GSE, Ekow Afedzie, said sustainable bonds had gained traction globally due to the enormous benefits they brought to the environment and society at large.
He said the GSE had been very committed to sustainability initiatives over the past years, culminating in its recent admission to the UN Sustainable Exchanges in July.
He noted that the launch of ESG Disclosure Manual Guidelines in November this year was also another testament to its commitment to this sustainability journey.
“The launching of green and sustainable bond rules today is another milestone on our sustainability journey. Listed companies in Ghana now can tap into these fast-growing bond investment products to raise capital that can be used in supporting ESG initiatives,” he noted.
Deep liquid markets
In a goodwill message, the Senior Financial Markets Specialist at Financial Sector Deepening, Africa (FSD), Victor Nkiiri, said “at FSD Africa, we see the development of capital markets to an end to increase income and job creation, access to basic services and building of sustainable futures”.
He said deep liquid markets were fundamental to economic growth because they helped channel longer-term domestic savings of an economy to the most productive use.
At An Average Investment Of USD 250 Billion Annually From 2020 To 2030
The African continent presents a massive investment opportunity for investors to advance the deployment of climate solutions in the coming decade according to a new report Climate Finance Innovation for Africa. However, this will require innovation in financing structures and the strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen.
Current levels of climate finance in Africa fall far short of needs. Africa’s USD 2.5 trillion of climate finance needed between 2020 and 2030 requires, on average, USD 250 billion each year. Total annual climate finance flows in Africa for 2020, domestic and international, were only USD 30 billion (CPI forthcoming), about 12% of the amount needed.
Barriers related to shallow financial market depth, governance, project-specific characteristics, and enabling skills and infrastructure have stifled private investment in African climate solutions to date.
To overcome these challenges will require innovation in financing structures. But there is no one-size fits all. Public and private investors must tailor their financial instruments and strategies depending on the acute or chronic nature of the barriers identified.
Recommended actions for increasing deployment of innovative finance include:
Identify and understand barriers constraining finance by sector and geography. Private investors must have the data to assess the risks affecting each investment decision based on its geographic and sectoral context. Building on their role as a catalyst for change, public investors should then deploy capital in a targeted way to address the specific barriers constricting private investment.
Match instruments with barriers. Public and private investors must tailor their financial instruments and strategies depending on the acute or chronic- nature of the barriers identified. The framework developed in this CPI study can serve as a toolbox for investors to access when reviewing investment opportunities in climate solutions.
Match instruments with project and technology lifecycles. As climate investments are typically long-term opportunities, investors must look to deploy different financial instruments and strategies in direct response to lifecycle-dependent considerations.
Enhance engagement and co-financing with local stakeholders. International private and public investors must work in collaboration with local stakeholders. This can help build capacity among local investors and inform targeted action by governments to improve investment performance.
Support innovation by establishing conducive policy and regulatory frameworks. Governance barriers remain one of the key impediments to sourcing climate finance in Africa. Most importantly, policymakers and regulators can foster climate finance innovation by adopting policy frameworks and long-term roadmaps.
This work provides a framework for how these instruments and strategies can be efficiently deployed to overcome barriers to finance and capitalise climate solutions in Africa. Real-world examples include:
TerraFund for AFR 100 has deployed a standardized process to deploy early-stage catalytic finance and technical assistance to spur the growth of grassroots innovators operating in the challenging land restoration sub-sector. It has mobilized USD 20 million in its initial round of investment, doubling the fundraising target it set out to raise over three years in 2020.
The Sub-National Climate Finance Initiative’s use of blended private equity and technical assistance to overcome the project and governance barriers facing investment in mid-sized climate infrastructure projects. To date, it has secured USD 150 million in funding for its blended equity fund.
Revego Africa Energy’s strategy of aggregating a diversified portfolio of operating renewable energy assets into Africa’s first YieldCo to attract investment from key/blue chip institutional investors. With support from a public-private partnership between Macquarie and the UK Government, Revego has secured institutional capital from one of the largest pension funds in South Africa.
This brief provides an overview of financial and non-financial solutions to address sector specific barriers. It provides six groups of practical instruments: non-tradable finance instruments; capital market instruments; result-based finance instruments; risk mitigation instruments; structured finance mechanisms and non-financial tools. Each of these tools has the potential to address one or more of the barriers currently hindering climate investments in Africa.
