The African Development Bank’s (AfDB) Board of Directors last Tuesday approved a $30 million equity investment in Africa Finance Corporation (AFC) for the rollout of innovative “green shares” aimed at mobilising resources for climate action projects across Africa.
The financial instruments are expected to unlock significant funding for high-impact projects, including wind and solar power plants in Djibouti and Egypt and energy storage systems in Cabo Verde as AFC will leverage the green equity and mobilise debt funding from capital markets for on-lending to sub-projects.
Despite contributing less than 3% of global carbon emissions, Africa faces severe climate impacts and an annual infrastructure financing gap of $170 billion. The AfDB’s investment positions AFC to play a key role in establishing an ecosystem of sustainable financing that will bridge these gaps to create economic opportunities and enhance Africa’s climate resilience.
Speaking on the climate change funding initiative, the bank’s Vice President for Private Sector, Infrastructure and Industrialisation, Solomon Quaynor, said “the collaboration between the African Development Bank and Africa Finance Corporation exemplifies the transformative power of strategic partnerships.
“The Bank Group’s first-mover investment in AFC’s green shares is expected to attract other regional and global investors, amplifying the impact of this initiative, and sending a strong signal to global investors that Africa is ready to lead the way in green growth”, he added.
In his remarks, Executive Board member and Head of Financial Services at AFC, Banji Fehintola, enthused: “We are honoured to welcome the African Development Bank, Africa’s largest development finance institution, as the first investor in our Green Shares programme.
“Their $30 million commitment highlights the critical role of sustainable financing in tackling Africa’s climate and infrastructure challenges, while strengthening our shared mission to drive transformative change across the continent. By working with a like-minded partner who shares our vision for a prosperous and sustainable Africa, we are advancing impactful solutions that support the continent’s green transition and long-term development,” he added.
This is even as the AfDB’s Director for Financial Sector Development, Ahmed Attout, stressed that “this partnership with AFC is a major milestone in our efforts to channel domestic, regional, and global capital into projects that build climate resilience and foster sustainable growth.”
Analysts project that the $30 million investment by the development finance bank would contribute to the creation of over 1,600 full-time equivalent jobs by 2031, while also fostering regional integration, and generating clean, reliable energy to power millions of African households.
In addition, they also anticipated that the climate change funding initiative would drive inclusive growth and expand economic opportunities for marginalised populations, including women and rural communities, in the continent.
