The first of the ‘Regional Finance Forums’ – convened by the incoming Egyptian Presidency of COP27, the United Nations Regional Commissions, and the UN Climate Change High-Level Champions for COP26 and COP27 – has concluded in Addis Ababa.
Hosted at the headquarters of the United Nations Economic Commission for Africa, it commenced a series of five Forums over the next two months in an unprecedented move to catalyse investments for bankable, carbon-cutting and adaptation projects in Emerging Markets and Developing Economies.
With only 2% of clean energy investments currently flowing into Africa, there is a fundamental mismatch between the projects supplied and the capital demanded. This needs to increase exponentially if Africa is to reach the USD$2.5 trillion of climate finance required by 2030 for it to implement the Paris Agreement. The aim, therefore, of the African Forum was to crowd-in capital at the pace and scale required to meet the finance adaptation and mitigation needs for the continent.
High-Level Champion for Egypt, Dr. Mahmoud Moheildin, said: “I’m very pleased we started as we should: in Africa. I’m happy that the silos have been broken through the engagements of investors, financial institutions, Ministers, and sectors to realise the investments needed for climate action projects. The idea from the get-go has been to apply common sense by uniting the right actors in the same rooms.”
180 projects and counting are now part of an evolving pipeline of initiatives under consideration, with 19 ‘best in class’ projects presented during the three-day Forum. These projects are ready to be implemented, funded and, if scaled, could deliver major returns for both development and climate action.
Projects included in the final review – which signposts an additional 17 projects in development – ranged from a Blue Carbon Accelerator Fund in support of the Great Blue Wall (GBW) initiative, to the African Forest Landscape Restoration Initiative (AFR100), a pan-African effort to bring 128m hectares of degraded land into restoration by 2030, by mobilizing private and public finance.
On mitigation, project highlights included a new hydroelectric facility on the Donga river, which would become Nigeria’s biggest power plant, and the development of a dam and storage reservoir in the Lesotho Lowlands, which would supply water to Lesotho, Botswana and South Africa.
What was clear from discussions is that the private sector will play a key role in determining whether Africa succeeds in securing a just, managed energy transition, recognising its different starting point on its path to decarbonization. But attendees were keen to highlight, not the usual perceptions around investment risks, but forward-looking opportunities to turn billions into trillions for Africa.
At the closing plenary, UN Deputy Secretary-General, Amina Mohammed said: “Investment in Africa’s green sectors brings a return higher than 420% in value addition and as high as 250% in job creation.”
The main questions on delegates’ minds at the Forum concerned project maturation and building trust, so that perceived risks are reduced.
High-Level Champion for the United Kingdom, Nigel Topping said: “This Regional Finance Forum is just the beginning of collaborative work to accelerate the deployment of finance from multiple sources to finance the transition to a just, resilient world. The projects presented in the last three days represent a huge opportunity set. Our task now is to refine and mature these projects so that they speak to investors.”
The projects will provide input into a compendium of initiatives to be presented to the United Nations Secretary-General at COP27 – “Opportunities for climate finance and investments on the SDGs” – to galvanize public and private sectors in working together to accelerate financing priority areas and projects.
The next Forums will take place in:
- Bangkok, Thailand (25 August) – Following on from the Asia Pacific Business Forum.
- Santiago, Chile (1-2 September) – A forum on climate finance and the energy transition, covering Latin America and the Caribbean.
- Beirut, Lebanon (15 September) – A one-day regional forum on climate finance needs and investment opportunities in Arab States.
- Geneva, Switzerland (20 September) – High-Level Roundtable on ‘enhancing sustainable management and financing for the critical raw materials required for low-carbon transitions’