Africa’s share of global green bonds issued in 2021 was 0.26% – AfDB

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Dr. Akinwumi Adesina, President of the African Development Bank (AfDB) Group has said that Africa’s share of global green bonds issued in 2021 was 0.26%.

He said this during a speech at the launch of the Alliance for Green Infrastructure in Africa (AGIA) COP 27. AGIA is a new platform that has been created to accelerate the development of green infrastructure in Africa in our collective drive towards net zero emissions. The Green Infrastructure Alliance is being established by AfDB and Africa50 in partnership with the African Union Development Agency, the European Investment Bank, the European Bank for Reconstruction and Development and the Rockefeller Foundation.

In February 2022, the AfDB Announced that in partnership with Africa50, the African Union Commission and the African Union Development Agency, was exploring collaboration with global partners to create an Alliance for Green Infrastructure in Africa.

The poor part of Africa: During his speech at the launch of COP 27, Dr. Adesina said that green infrastructure is very limited in Africa and this can be seen in Africa’s participation in infrastructure green bonds globally. Of the $522 billion that has been in green bonds from 2007 to 2018, Africa accounted for just $2 billion, which is about 0.4%. As of 2021, $623 billion of green bonds were issued globally, and Africa’s share was 0.26%, the lowest share of any region in the world. The same can be said in terms of green loans, Africa’s share is 1.9%. Meanwhile, in terms of global issuance of sustainability bonds and sustainability-linked loans and bonds, Africa’s share is 1%.

Paying the price: In June 2022, Jean-Paul Adam, Director of the Division of Technology, Climate Change and Natural Resources Management at the United Nations Economic Commission for Africa (UNECA), indicated that Africa has low private sector investment and high capital costs to invest in green, sustainable or social sectors. He highlighted the fact that while Africa has 23% of official climate finance, it has less than 1% of global green bond issuance and is paying twice as much as similarly rated peers to access markets.

At the AGIA launch, Dr. Adesina also spoke about AGIA’s focus, which is to develop low-carbon, climate-resilient infrastructure for Africa. According to Dr. Adesina, AGIA is established to:

  • Closing the infrastructure financing gap for Africa
  • Building sustainable and resilient infrastructure for Africa
  • Mobilize African and global institutional investors to invest in quality green infrastructure
  • Accelerating the scale needed to accelerate Africa’s transition to net zero emissions
  • Mobilizing private sector capital at scale to support greening Africa’s infrastructure

Infrastructure financing gap: Dr. Adesina made it clear that only by working together with partners and investors can Africa have transformative impacts and set the continent on a clear path to achieving net zero emissions and mitigating climate change. Africa needs infrastructure financing estimated at $130 to $170 billion a year with an infrastructure financing gap of up to $108 billion a year. Most of the infrastructure for Africa has yet to be built, and this presents a huge opportunity to get it right. The emphasis should be on building climate-smart and climate-resilient green infrastructure in Africa.

How can you get this: Dr. Adesina told attendees that Globally, there is $103 trillion in assets under management and if Africa can get 0.03 to 0.04% of that, the continent will literally close all of its infrastructure financing gaps. He said AGIA will use its resources to green existing brown infrastructure in Africa, converting heavy fuel oil and diesel plants to gas-powered and hybrid industries, greening non-energy infrastructure, especially transportation systems in Africa that use compressed natural gas. , capturing flare gas and converting it to liquefied petroleum gas, which is needed for cooking, gas generation, and fertilizer manufacturing.

Why this matters: As Adesina emphasized, the shift to accelerate the development of green infrastructure will open up great opportunities for the launch of more green bonds and will attract institutional investors who are increasingly guided by environmental, social and governance (ESG) criteria in their investment decisions. investment.

  • By focusing on green infrastructure development, Africa can increase its share of green bonds, which accounts for approximately 2.5% globally, accumulating at least $14 billion in green finance to boost Africa’s green infrastructure asset.

… Africa’s share of global green bonds issued in 2021 was 0.26%: AfDB Read more on … Naijaonpoint.

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