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AGIA initiative launched to address green financing needs in Africa

A climate-friendly initiative in Africa called the “Alliance for Green infrastructure in Africa” was launched on 10th November, 2022 at the sidelines of the 27th Conference of Parties held recently at Sharm El-Sheikh, Egypt. The formation of such a alliance was first announced at the 6th European Union-African Union Summit in Brussels in February this year.

It was created by the African Union, African Development Bank Group (ADBG) and Africa50, and supported by other global partners such as European Bank for Reconstruction and Development, Rockfeller Foundation, US Trade and Development Agency, etc.
At the inaugural address, the ADBG President Dr. Akinwumi Adesina said, “The AGIA platform is a new platform that is fully aligned with the global call of the G7 leaders in June this year when they called for the partnership on global infrastructure and investment to mobilize $600 billion in infrastructure by 2027, especially to support sustainable, quality and climate-resilient infrastructure.” He also claimed that Africa needed infrastructure financing between $130billion to $170billion per year while the financing gap can be upwards a hundred billion per year.

As per a report by the African Development Bank Group which is a founder of the alliance, the aim will be to “raise significant capital to accelerate Africa’s just and equitable transition to Net Zero emissions.” In addition, it has two strategic objectives namely, “generate a robust pipeline of transformational bankable projects” and “catalyze financing at scale and speed for Africa’s infrastructure.”
The alliance has identified four important pillars for the future missions. Under project preparation and development, a strong pipeline of bankable green infrastructure projects will be developed. Under project ratings, a green eligibility criteria and project guidelines for infrastructure projects will be developed. Under co-financing and de-risking pillar, requisite de-risking instruments will be developed to facilitate investment and develop a clear framework for mobilizing equity and debt financing for green infrastructure. The last pillar will mobilize institutional investors for leveraging African and International capital markets to drive green bond issuances and finance for respective projects.

The Alliance for green infrastructure in Africa has announced that it will raise US$500 million for early-stage project development capital for the bankable project pipeline that is expected to generate up to US$10 billion green investments. The focus sectors will be energy, water and sanitation, transport, health, broadband infrastructure, urban and rural infrastructure.

Africa is suffering from increased disasters which can be blamed on intensifying climate variables although it has contributed minimum to pollution. Rockefeller Foundation Rajiv Shah said, “Africa is on the front lines of the world’s climate, energy and food crises, yet it has contributed the least to these crises. The continent is only responsible for about 3% of historic greenhouse gas emissions.”
African Union Commissioner for Energy and Infrastructure Dr. Amani Abou-Zeid said: “As African institutions, we must focus on early-stage project preparation, de-risking interventions, and building a robust business environment to attract investors from all parts of the world. We want to galvanize around priority projects that combine all our efforts to deliver. We must now intensify our efforts and move faster and at scale.”

Also speaking at the ceremony, Ambroise Fayolle of the European Investment Bank which is also a supporting partner said that Climate was a key priority for the European union and it in EIB’s mandate to support green projects in Africa. He pointed out that private capital involvement in the alliance was important.

Recently, COP27 concluded in Egypt with significant decisions such as a Loss and Damage Fund for the most affected regions affected by disasters. While the summit was overshadowed by the post-disaster relief agendas, initiatives such as AGIA are important to address the base issue which is green infrastructure.

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