Projects designed to bolster private investment in effective climate solutions in six African countries have received $330 million in funding from the African Development Bank Group, the bank announced late last month. Projects in Burkina Faso, Democratic Republic of Congo, Ghana, Kenya, Mali and Mozambique were the winners of a global competition run by Climate Investment Funds, a pair of funds established by the AfDB to help developing countries pilot innovations in clean technology, sustainable forestry, renewable energy and climate-resilient development.
Private investment in renewable energy can be risky, particularly in developing countries, the bank said. The upfront capital costs are high, and return on investment is often slower than better-known investments, such as fossil fuels. Mitigating these factors, along with the need to address the lack of understanding of the value of climate investment were the underlying reasons the CIF decided to set aside the special funds, according to AfDB.
The six project concepts focus on forests in Burkina Faso, DRC and Ghana, renewable energy in Kenya and Mali, and climate resilience in Mozambique. The selected African project concepts – a third of the 15 final winning concepts globally – will now go forward for further development by the AfDB as their CIF implementing partner.
“At AfDB, we believe that private sector engagement in climate action is critically important to stimulate markets, increase investment potential, develop climate-friendly business models, and ensure a sustainable shift for effective climate solutions,” Mafalda Duarte, AfDB’s CIF coordinator who spearheaded the African project concept submissions in the competition, said in a press release. “We now look forward to working with the seven private sector sponsors in the countries to develop the concepts for full funding by next year.”
Home to the largest tropical forest in Africa and the second largest in the world, Democratic Republic of Congo will be a pilot country under the Forest Investment Program (FIP), a targeted initiative that aims to address the underlying causes of deforestation and forest degradation. Among the top 10 countries in terms of loss of forest cover on an annual basis, the Central African nation will receive $58.4 million in funding to improve forest management, according to the CIF. Building on an existing UN program in the country (called Reducing Emissions from Deforestation and Forest Degradation or REDD), initiatives made possible through the funding range from afforestation and reforestation to subsistence agriculture and land use planning.
In Mali, project organizers hope to reduce the West African nation’s dependence on fossil fuels by spurring renewable energy initiatives. The country currently meets all of its fossil fuel needs through imports, making it highly vulnerable to price volatility, according to the CIF. With $40 million in funding from AfDB, Mali hopes to expand its photovoltaic solar, mini-hydro and biofuel technologies, as well as improve capacity and project management skills to build its renewable energy sector.
“Going forward, more efforts like the CIF set-asides are needed to raise awareness about business opportunities for potential private sector sponsors in developing countries, particularly for climate adaptation,” added Duarte. “We applaud these initiatives, and efforts like the set-asides must be developed across a broader horizon than the CIF pilot countries, reaching out to a wide swath of the developing world to stimulate large-scale change.”
These projects, along with four additional efforts across the continent, will be financed through either public-private partnerships or the private-sector arms of multilateral development banks like AfDB, reports ThinkProgress. Private companies that sign on to invest in the projects will then be offered things like loans, guarantees or equity in order to offset the increased financial risk of investment, the site reports.
For more information on the projects AfDB is funding in Africa and around the world, visit the CIF online.
Image credit: PV solar panels in Mali, courtesy of Climate Investment Funds
Based in Philadelphia, Mary Mazzoni is a freelance journalist who frequently writes about sustainability, corporate social responsibility and clean tech. Mary also contributes to Earth911; her work has appeared on the Huffington Post, Sustainable Brands and The Daily Meal. You can follow her on Twitter @mary_mazzoni.