AfDB Justifies Priority For Climate Finance In Africa

Posted by Eric Ojo African News, Business News, Latest Headlines Wednesday, July 27th, 2022

(AFRICAN EXAMINER) – African Development Bank (AfDB) has expressed its justification for prioritizing climate financing in its development intervention programmes in Africa.

The Bank said the premium it places on climate finance, strengthened its commitment to double its climate finance from $12.5 billion in the 2016-2020 period to $25 billion between 2020-2025 and to allocate at least 40 percent of its annual investments to climate finance.

AfDB’s Director General for Southern Africa, Leila Mokaddem disclosed this at the inaugural OPEC Fund Development Forum, held recently in Vienna, Austria.

Mokaddem spoke during a session entitled, “Turning Public Ambition into Effective Action”, during which panelists discussed actions and examples of how to move commitments made by development institutions, governments and other stakeholders, from lofty declarations to real-world change.

The panel comprised Ahunna Eziakonwa, Assistant Administrator and Regional Director for Africa at United Nations Development Programme (UNDP), Hekuran Murati, Minister of Finance, Labor and Transfers of the Republic of Kosovo and Andreas Klasen, Professor of International Business and Director of the Institute for Trade and Innovation at Offenburg University in Germany.

The forum brought together governments, development institutions, private sector partners, and other stakeholders around its theme, “Bridging the Financing Gap and Turning Public Ambition into Climate Action”.

She noted that creating fiscal space for development finance and stepping up regional infrastructure projects will be vital to Africa’s road to achieving net zero

“We need to rethink the way we finance development. We need to put more resources into institutions like the AfDB”, she said.

The Bank’s Southern African DG also observed that regional integration and energy supply would be the steppingstones to ensure energy security in Africa.

“Energy is one of the essential requirements for Africa’s development. The cost of delayed full electrification of the continent is increasing as time goes by.

The AfDB has therefore made ‘Light up and Power Africa’ the first of the five pillars of its High 5 vision”, she added.

Meanwhile, the New Deal on Energy for Africa, is an ambitious programme to achieve universal access for Africa by 2025. Its strategy is built around the achievement of four targets including increasing on-grid generation to add 160 GW of new capacity by 2025; create 130 million new connections;
Mokadden said further explained that most of them will be in the form of regional projects.

Notably, the Bank is also making a strong case for an allocation of some of the International Monetary Fund’s Special Drawing Rights so that they can be leveraged to meet the $218 billion a year needed for Africa’s infrastructure needs such as roads and ports.

In her submission, Eziakonwa shared the UNDP’s bold commitment to enable 500 million people gain access to electricity in the next 4 years, more than 50 percent of those currently without access. She said it was proof of the institution’s determination to rescue the SDGs.

“That is a very bold statement of purpose which shows that we understand that conquering energy poverty is necessary for overcoming poverty” she stressed.

While giving the participants other examples of concrete action taken in Europe to turn ambition into action, Murati said his country had sought to balance energy and food security with affordability. “It’s another thing if these costs are passed on to consumers and families”, he further stated.

He also noted that the Kosovo government has created windows for loan guarantees for businesses and households who want to invest in energy, enabling an expanded energy capacity, adding that the government is equally addressing legal and regularity frameworks as well as storage facilities.

On his part, Klasen said OPEC Fund has approved over $780 million in financing for climate change mitigation and adaptation over the last 4 years. He noted that new synergies between OPEC, multilateral development banks and other development partners would be important to achieving energy security.

Interestingly, the panelists were in agreement about the importance of affordable, clean energy for Africa.

Earlier in her remarks as the spotlight speaker for the session, Egypt’s Minister of International Cooperation, Dr. Rania Al-Mashat highlighted the need for national and regional action to address climate change.