African Countries to Bolster Private Sector’s Role in Climate Action
28 November 2013: With support from the African Development Bank (AfDB), six African countries won a global competition run by the Climate Investment Funds (CIF) to provide dedicated funding to engage the private sector in effective climate solutions.
The six winning countries are: Burkina Faso, the Democratic Republic of the Congo (DRC), Ghana, Kenya, Mali and Mozambique. The project concepts, which are on track to move towards further development, focus on forests in Burkina Faso, the DRC and Ghana, renewable energy in Kenya and Mali, and climate resilience in Mozambique.
Mafalda Duarte, AfDB's CIF coordinator who spearheaded the African project concept submissions, said 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.” She added that “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.”
The CIF, along with the AfDB and the other multilateral development banks (MDBs), undertook the competition to help reduce the risks that prevent the private sector's entrance into renewable energy, energy efficiency, forestry and climate resilience investments, particularly in developing countries. Upfront risks for early entrants exist, as do large capital costs, a lack of suitable financing and insurance products, and a return on investment that is often slower than other better-known investments, such as fossil fuels. The CIF set aside the special funds in order to mitigate these factors, address the lack of understanding of the value of climate investment and create new types of investment products.