LONG TERM FINANCING FOR CLIMATE CHANGE CRITICAL
LONG term financing for climate change resilient infrastructure through financial instruments such as green bonds is critical to bridge the financing gap and to foster sustainable development, says African Development Bank (AfDB)
AfDB Country Manager for Zambia Raubil Olaniyi Durowoju observed that Africa annually had a financing gap of up to US$108 billion.
Africa’s infrastructure needs continued growth from an estimated US$130 billion to US$170 billion a year.
Mr Durowoju said this yesterday in Lusaka at the 2022 African Long-Term Finance Workshop under theme “Financing Africa Sustainable Development in Times of Global Headwinds”. He explained that the ef
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forts to achieve these objec
November 11, 2022 tives led to the launching of the Africa Long Term Finance Initiative (ALTFI) in 2019.
This initiative is the fruit of the successful collaboration between the AfDB, the German Cooperation (GIZ), Financial Sector Deepening Africa (FSD Africa) and Making Finance Work for Africa to improve intermediation of long term finance in Africa by strengthening knowledge generation and dissemination.
Mr Durowoju said the initiative sought to improve market intelligence on long term finance in Africa through the long term finance database and scoreboard.
This presents comparative indicators of the level of development of long term finance markets in Africa.
“The initiative provides the impetus for effective reforms to deepen long term finance markets at the national level by carrying out a series of Country Diagnostics,” he said.
And Bank of Zambia (BoZ) governor Denny Kalyalya said access to long term finance would spur the productive capacity of firms and enables allocation of the resources in much needed sectors such as affordable housing to support rapid urbanisation drive of Africa.
Dr Kalyalya stated that the availability of long term financing was therefore critical to foster productivity growth for sustained structural transformation in Africa.
He however said financing Africa’s transformation has become trickier given the current focus on climate change and increasing global uncertainties.
Dr Kalyalya said this in a speech read for him by director-bank supervision Gladys 9
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Mposha, who said the theme of the event was relevant to current global trends.
According to the International Monetary Fund (IMF), sub-Saharan African nations will need to raise between $30 billion and $50 billion in addition funds per year in order to adapt to climate change.
Dr Kalyalya indicated that green bonds are becoming an avenue for mobilizing financial resources to finance long term investments.
“The financial risks associated with climate change are coming to the attention of policymakers, who are now taking steps to integrate climate related risk management into their mandates and portfolios. The lingering effects of Covid-19 on the world economies serve to further emphasis the necessity of mobilizing long term financing,” Dr Kalyalya said.