- AfDB’s “green shares” plan is poised to unlock financing for high-impact wind and solar power plants in Djibouti and Egypt and energy storage systems in Cabo Verde.
- AFC expected to leverage green equity to mobilise debt funding from capital markets for on-lending to sub-projects in economies.
- Financing is poised to create at least 1,600 full-time work opportunities by 2031.
The AfDB has set aside a $30 million equity investment in Africa Finance Corporation (AFC) aimed at implementing innovative “green shares”, an initiative that is structured to raise more resources for climate action projects in African economies.
According to the Pan-African lender, “green shares” are financial instruments that are expected to unlock critical financing for high-impact projects, including wind and solar power plants in Djibouti and Egypt and energy storage systems in Cabo Verde.
In the financing model, AFC is expected to leverage the green equity and mobilise debt funding from capital markets for on-lending to sub-projects within economies.
“The collaboration between the African Development Bank and Africa Finance Corporation exemplifies the transformative power of strategic partnerships,” explained Solomon Quaynor, AfDB Vice President for Private Sector, Infrastructure and Industrialisation
He added: “The Bank Group’s first-mover investment in AFC’s green shares is expected to attract other regional and global investors, amplifying the impact of this initiative, and sending a strong signal to global investors that Africa is ready to lead the way in green growth.
“We are honoured to welcome the African Development Bank, Africa’s largest development finance institution, as the first investor in our Green Shares program,” said Banji Fehintola, Executive Board Member and Head of Financial Services at AFC.
“Their $30 million commitment highlights the critical role of sustainable financing in tackling Africa’s climate and infrastructure challenges, while strengthening our shared mission to drive transformative change across the continent. By working with a like-minded partner who shares our vision for a prosperous and sustainable Africa, we are advancing impactful solutions that support the continent’s green transition and long-term development,” he added.
AfDB backing AFC to drive sustainable financing
While Africa accounts for under 3 per cent of carbon emissions in the world, the continent of over 1.4 billion people grapples with adverse negative impacts of climate change including droughts, floods and diminishing agricultural returns.
What’s more, experts note that Africa faces an annual infrastructure financing gap of $170 billion. The latest AfDB investment positions AFC to play a key role in establishing an ecosystem of sustainable financing that will bridge these gaps to create economic opportunities and enhance Africa’s climate resilience, the lender noted in a statement.
AfDB’s Director for Financial Sector Development Ahmed Attout stated, “This partnership with AFC is a major milestone in our efforts to channel domestic, regional, and global capital into projects that build climate resilience and foster sustainable growth.”
The lender forecasts that the $30 million investment will help create at least 1,600 full-time work opportunities by 2031. Additionally, the investment will drive the integration of regional economies, and produce clean, reliable energy thereby lowering the number of households without connection to a reliable source of power.
To add on, the project is billed to enhance inclusive growth, and therefore expand economic opportunities for millions of marginalised populations especially women and people living in remote locations.
Established in 2007, AFC brings together expertise from the industry focusing on financial and technical know-how, project structuring and development and risk capital to manage infrastructure needs across economies in Africa.
With membership from 43 countries in Africa, some of the key focus industries by the financial are power, natural resources, heavy industry, transport, and telecommunications.
Read also: From fossil fuels to green futures: Oxford and EBC Financial Group on what’s holding us back
