ALLIANCE FOR GREEN INFRASTRUCTURE IN AFRICA

Engineering News

Development finance institution (DFI) the African Development Bank (AfDB) and infrastructure fund Africa50, in partnership with the African Union Commission and the African Union Development Agency, aim, through collaboration with global partners, to create an Alliance for Green Infrastructure in Africa to catalyse bankable, greener infrastructure projects at scale and speed.

AfDB president Dr Akinwumi Adesina made the announcement on Thursday while speaking at a roundtable on climate change and energy transition at the sixth European Union-African Union Summit in Brussels, Belgium.

DFIs the European Investment Bank, the European Bank for Reconstruction and Development, the French Development Agency (AFD) and the Rockefeller Foundation have expressed their interest in joining the alliance. There is also a strong push to attract more African and global partners, the AfDB says.

The Alliance for Green Infrastructure in Africa will complement, enhance and partner with continental and global initiatives to crowd in private capital to fund green infrastructure projects. The idea is to bridge investment gaps and engender financing at scale and with speed, the AfDB says.

“The alliance’s overarching goal will be to leverage the private sector to transparently develop transformative infrastructure that sustainably bridges Africa’s infrastructure deficit in a climate-resilient manner. It will do this by addressing universal energy access and strengthening Africa’s energy systems, while minimising sovereign debt accumulation, especially during this period of limited fiscal capacity across Africa,” the bank says.

“The key challenge for infrastructure development on the African continent is the dearth of bankable opportunities. Therefore, project development and preparation are critically important. Evidence shows that there is enough capital looking for yield. However, what is missing, is a robust pipeline of de-risked projects with stable long-term cash flows.”

There is also increasing institutional investor appetite for green, sustainable, environmental and social investments. That is why these African institutions and global partners are intent on mitigating the adverse effects of climate change through prompt investment in greener, climate-resilient, inclusive, quality and sustainable infrastructure, the AfDB says.

Specifically, the Alliance for Green Infrastructure in Africa will raise significant capital to accelerate Africa’s just and equitable transition to net-zero emissions, with two strategic objectives, namely to develop and fund a robust pipeline of transformational bankable greener projects and to catalyse financing at scale and speed for Africa’s greener infrastructure.

To build a robust pipeline of bankable projects, the alliance will raise up to $500-million to provide early-stage resources to develop greener infrastructure projects. This will start at the prefeasibility stage all the way through to commercial and financial close.

These resources will also support the development of innovative ideas for accelerating the transition to net-zero which, if proven sustainable, can be further scaled up and replicated across countries.

To achieve scale in greener infrastructure project development, the alliance will execute its programme with three categories of infrastructure project developers: a scaled-up Africa50; Africa50 in co-development with local African developers; and select experienced third-party private infrastructure developers.

Further, the alliance’s project development activities are projected to generate up to $10-billion in investment opportunities. This will be mobilised from a combination of co-investments, co-financing, risk mitigation and blended finance from alliance members, other DFIs, commercial financial institutions and foundations, public and private global and African institutional investors, project sponsors and multilateral development banks’ sovereign operations, and Group of 20 bilateral donors.

Alliance members will aim to use their collective efforts to expedite Africa’s transition to net-zero by bridging the climate-resilient infrastructure gap, thus helping Africa to meet its global development ambitions, the AfDB says.