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The African Development Bank in a recently published scoping study recommends that development finance institutions and other investors focus on high-impact, high-growth potential startups that can drive climate-related innovation.

The study, NDC implementation in Africa through green investments by private sector – A Scoping Study, was produced in partnership with the Fund for African Private Sector Assistance. It says climate action offers profitable opportunities for the private sector which at the same time will help to protect the investments from the impact of climate change. Governments should thus be encouraged to see the private sector as a critical partner for climate action and create the enabling policy and regulatory environment that would enable private sector innovation.

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Governments and development institutions are therefore urged to engage the private sector to develop the green economy as this would help meet Africa’s commitment under the Nationally Determined Contributions (NDC) of the Paris Agreement of Climate Change.

Al Hamndou Dorsouma, AfDB acting director of climate change and green growth said they have pledged $25 billion towards climate action on the continent by 2025. “The NDCs developed by African countries as part of the Paris agreement will require an estimated $3 trillion of investment by 2030, of which at least 75% is expected to come from the private sector, which has a crucial role to play.”

Private sector investment can help African countries meet nationally determined climate goals

The study identifies entry points and opportunities for private sector participation in NDC implementation in Africa with a focus on five pilot countries – Egypt, Morocco, Mozambique, Nigeria and South Africa.

Dorsouma pointed out private sector participation in African NDCs needs to be strengthened. According to the main part of the study that focused on the continent, only five African countries have considered the role of the private sector in their NDCs – Burkino Faso, Ghana, Morocco, Niger and South Africa.

The AfDB runs a number of initiatives to support the achievement of NDCs. Last year they launched the Private Sector Investment Initiative for African NDCs, which is supposed to build the capacity of African businesses to mainstream climate change into their operations and identify opportunities that will advance NDC goals.

Through this initiative, the bank trained SMEs and financial institutions from six countries on strategies to identify climate risks and opportunities in their businesses and estimate the impact of their business activities on greenhouse gas emissions.

You can read the NDC implementation in Africa through green investments by private sector – A Scoping Study report online.