AfDB's commitment: supporting climate resilient and low-carbon development
AfDB, Africa's premier institution for mobilizing resources for African economic and social development, is committed to providing and leveraging well-placed finance for climate action as a cornerstone of development.
The AfDB supports African countries access to the climate finance they need to move toward climate-smart sustainability. This commitment underpins its 2013-2022 strategy promoting inclusive and green growth in Africa. Almost US$ 7 billion have been committed to projects in support of climate resilient and low-carbon development in the past four years.
Importance of climate finance for Africa
For Africa, climate finance has become essential for jump-starting effective development. Climate finance serves development by:
- Strengthening national finance to support out-of-reach innovations;
- Leveraging new and additional money from public and private sources;
- Lowering barriers to engage private sector and other investors;
- Bringing together stakeholders from community to global levels;
- Supporting new and innovative technologies, such as renewables, climate resilience mechanisms, and forest management solutions.
"The current climate financing architecture is not providing the finance Africa needs. Much more needs to be done to increase Africa's access to climate finance"
Akinwumi Adesina, President of the African Development Bank Group
COP21: AfDB’s role in promoting a climate-smart Africa
AfDB’s role in promoting a climate-smart Africa
The Bank works with countries through a set of nine climate finance funds and mechanisms and policy advocacy initiatives (the Africa Climate Technology and Finance Centre, the Green Growth Initiative and SE4All Africa Hub secretariat) to ensure its well-targeted delivery.
The climate finance funds and mechanisms are the following:
MDB/FI Collaborative efforts on Climate Finance
Since 2011, Multilateral Development Banks (MDBs) have jointly tracked and reported on climate finance using common methodologies. This year, Common Principles have been developed to track financing for both Adaptation and Mitigation in collaboration with the International Development Finance Cooperation (IDFC) enhancing transparency and harmonization in methodologies for tracking progress towards the financing goal.
Furthermore, to recognize the catalytic role MDBs, other Development Finance Institutions and public sources play in engaging private sector investment in climate action, work to develop methodologies to quantify and report leverage was initiated in 2015.
Over the past decade, MDBs have demonstrated the possibilities to effectively do business while taking into account climate change considerations. In this regards, five principles representing best practice on how to effectively mainstream climate change considerations within financial institutions have been articulated for consideration and endorsement by other FIs.
- 2011-2014: on average, 26% of AfDB annual investments were flagged as climate-smart projects
- 2011-2014: US$7 billion have been committed to support 213 climate resilient and low-carbon development projects in the past four years. 80% were own-resources and 20% were funded by external climate funds.
- In 2014 the AfDB mobilized US$ 1,916 billion for climate-smart projects including US$1,156 billion for mitigation and US$756 million for adaptation. This amount is up by 59% compared to 2013.
Through climate finance, AfDB seeks to:
- Create an enabling environment for green project/program development
- Co-finance projects and support the project cycle from preparation to implementation
- Work through multiple climate-focused funding channels offering grants, concessional loans, guarantees, equity
Looking ahead: AfDB will triple its current climate financing
The Bank recently committed to nearly triple its annual climate financing to reach US$5 billion a year by 2020. AfDB's climate spending will increase to 40% of its total new investments by 2020 (compared to 26% on average from 2011 to 2014).