AfDB Approves Climate Investment Funds’ Implementation
Tunis, 20 September 2010 - The African Development Bank (AfDB) Boards of Directors have authorized the signing of financial procedures agreements with the International Bank for Reconstruction and Development acting (IBRD) as the trustee of the two Climate Investment Trust Funds (CIFs): the Clean Technology Fund (CTF) and the Strategic Climate Fund (SCF).
The AfDB has been involved in the design and development of the funds since their inception in 2008, and by signing the agreement, the institution has activated its role in implementing the CIF and providing beneficiaries in Africa greater access to this pair of global investment instruments worth over US$6 billion in concessional financing.
“Blended with AfDB’s own resources, low-cost CIF funds will help bolster developing countries’ efforts to pursue a green-growth and climate-resilient economic path,” the AfDB Vice President for Infrastructure, Private Sector and Regional Integration, Bobby Pittman, said following the board’s approval on Wednesday, 15 September 2010.
“We anticipate that expanding CIF implementation in Africa will inspire investor confidence in this emerging market and generate even more financing for clean, renewable energy and climate compatible development,” Mr. Pittman added.
Through the AfDB, the CIFs will be channeling approximately US$625 million for clean technology projects. The Bank will blend these funds with its own resources to support several large-scale renewable energy projects, including Morocco’s 500MW solar power complex in Ouarzazate; the Egyptian 200MW wind farm and transmission infrastructure on the Gulf of Suez; and an IFC and the AfDB joint initiative that will target two to three commercial private banks or financial leasing companies in South Africa for on-lending of funds for renewable energy and energy efficiency investments.
The AfDB is also supporting nine other African nations selected by CIF governing bodies - Mozambique, Niger, Zambia, Ghana, Burkina Faso, DRC, Ethiopia, Kenya and Mali - to develop investment strategies and projects promoting innovative approaches to climate resilience, sustainable forest management and small-scale renewable energy supply system, particularly in areas where on-grid, centralized energy supply systems are not cost-effective.
The CIFs are just two of the financing tools AfDB champions to support climate change actions in Africa. The AfDB is leading the development of others such as the Sustainable Energy Fund for Africa, the Fund for Private Sector Assistance and the Africa Green Fund. In addition, it is catalyzing private sector support to generate additional resources for green economy investments through the launch of clean energy bonds and carbon finance.
Taking better advantage of climate funding is a central component of AfDB’s Climate Change Action Plan (2009-2014) which seeks to 1) encourage countries to mainstream clean energy options into national development plans, 2) promote investment in climate resilience, renewable energy and energy efficiency, sustainable transport, and sustainable land use and forestry management, and 3) boost energy access in Africa by using the huge energy potential of the continent and addressing the need for a low-carbon economy.
Key goals include an increase in financing for renewable energy, energy efficiency and sustainable transport initiatives by an average of 10% per annum; a reduction of the current rate of deforestation and land degradation by 2% in 2014 and an increase in the area of land under improved agriculture water management by 500.000ha by 2014.
AfDB plans to invest more than US$10 billion from its own resources, as well as global funds like the CIF, on climate change-related projects over the next five years, 10% of which will be used to strengthen policy, regulatory reforms and competency building that will enable African countries to move towards low carbon and climate resilience economic paths. Roughly 80% of investments will go to infrastructure projects in both low carbon and adaptation to climate change areas with a large component to be implemented through regional projects.