Unlocking green financing for Africa

Africa is facing a monumental challenge in raising at least 2.8 trillion dollars to combat the ongoing climate crisis that is ravaging the continent. In a recent interview with Stephen Hall, Head of Ashden Awards, UK, on CNBC Africa, the pressing issue of green financing for Africa was brought to light. Hall emphasized the urgent need for Africa to secure substantial funding to meet its nationally determined contributions towards climate change targets by 2030. However, in 2020, only around 30 billion dollars was raised specifically to address these requirements, leaving a massive financing gap that needs to be bridged within the next decade. The critical question now is how this financial shortfall will be filled - through public funds, private investments, or a combination of both. There have been pledges from international climate negotiations promising 100 billion dollars annually in climate finance, yet these commitments have not materialized. The remainder of the needed funds will have to come from private finance, such as equity and debt deals. It is paramount that this gap is closed by 2030, as a substantial portion of the green finance directed towards Africa will not only have environmental benefits but also significant human development impacts. Hall identified a key opportunity in the green financing space focusing on decentralized and renewable energy solutions to address the growing energy access challenge in sub-Saharan Africa. Despite progress in electrification due to population growth, a significant portion of the population still lacks access to electricity. Hall stressed the importance of financing models that can swiftly resolve the energy access issue, benefiting both the communities and investors. One of the accomplishments highlighted by Hall was the impact of the Ashden Awards in recognizing and supporting innovative climate solutions. Over the past two decades, the awards have showcased businesses that adopt a holistic approach to climate solutions, particularly in sub-Saharan Africa. These initiatives combine energy access projects with regenerative agriculture, positively impacting smallholder livelihoods while mitigating climate change. Noteworthy achievements from past Ashden Award winners include Ecozen and Resham Sutra, who secured significant investments and joined reputable accelerator programs after receiving recognition. The success stories illustrate the effectiveness of aligning business models with environmental priorities and attracting the necessary funding to scale operations. When discussing the challenges faced by companies seeking green financing, Hall emphasized the importance of investors understanding the context and intricacies of operating in Sub-Saharan Africa. He noted that the onus is not solely on companies to develop bankable strategies but also on investors to familiarize themselves with the unique challenges and opportunities presented by African markets. Building capacities on both ends, in terms of understanding local contexts and exploring non-traditional revenue streams, is crucial to bridging the financing gap. As Hall looks towards the future and the upcoming evaluation of new climate initiatives for the Ashden Awards, he highlighted the significance of companies clearly articulating their value propositions and growth strategies. The most compelling entries, according to Hall, are those that not only outline their business models and revenue sources but also demonstrate a deep understanding of the problems they aim to solve and how winning an award can propel their future growth. In conclusion, the journey towards unlocking green financing for Africa is fraught with challenges, yet opportunities abound for innovative solutions to lead the continent towards a sustainable and resilient future. With concerted efforts from both investors and businesses to understand and address the pressing climate and development needs in Africa, bridging the 2.8 trillion-dollar gap may become a reality, paving the way for a greener and more prosperous continent.