The African Development Bank (AfDB) recently approved an investment of $30 million in the pan-African institution, Africa Finance Corporation (AFC), in Abidjan for the deployment of innovative green actions aimed at mobilizing resources for climate action projects across the continent.
These innovative financial instruments are expected to unlock significant funding for high-impact projects, including wind and solar power plants in Djibouti and Egypt, and energy storage systems in Cabo Verde, the AfDB stated in a press release.
Africa Finance Corporation will leverage green equity and mobilize debt financing from capital markets to reallocate it to sub-projects, the same source explains.
Although it contributes less than 3% to global carbon emissions, Africa faces severe climate impacts and an annual infrastructure financing gap of $170 billion. The investment from the African Development Bank enables Africa Finance Corporation to play a key role in establishing a sustainable financing ecosystem that will bridge these gaps to create economic opportunities and enhance Africa’s resilience to climate change, the AfDB adds.
According to the Vice President of the African Development Bank, responsible for the private sector, infrastructure, and industrialization, Solomon Quaynor, the collaboration between the AfDB and Africa Finance Corporation illustrates the transformative power of strategic partnerships. “The Bank Group’s investment in Africa Finance Corporation’s green actions should attract other regional and global investors, amplify the impact of this initiative, and send a strong signal to global investors that Africa is ready to lead the way in green growth,” Solomon Quaynor stated, as quoted in the release.
“His commitment of $30 million underscores the essential role of sustainable financing in addressing Africa’s climate and infrastructure challenges while reinforcing our shared mission to drive transformative change across the continent. By working with a like-minded partner who shares our vision of a prosperous and sustainable Africa, we are advancing high-impact solutions that support the green transition and long-term development of the continent,” he added.
The investment is expected to contribute to the creation of over 1,600 full-time jobs by 2031, while promoting regional integration and producing clean and reliable energy to power millions of African households. It is also expected to foster inclusive growth and expand economic opportunities for marginalized populations, including women and rural communities, according to the release.