ENHANCING CLIMATE RESILIENCE IN AFRICA THROUGH DFI INVESTMENTS IN MITIGATION AND ADAPTATION STRATEGIES
water security; climate information and early warning; green transport and infrastructure; green energy and energy efficiency; and green finance.
The International Finance Corporation (IFC) has identified climate change as a strategic focus, committing to increase its climate-related investments, globally, to an annual average of 35 per cent of its own-account, long-term commitments from 2021 to 2025. In partnership with various financial institutions, the IFC is financing projects that address climate risks through both mitigation and adaptation strategies. In fiscal year 2022, the IFC allocated $4.4 billion to global climate finance, leveraging an additional $3.3 billion from external sources. Of this, $2.1 billion was directed towards supporting Africa’s transition to green energy.
Notable among the IFC’s projects is its contribution to the World Bank Group’s Scaling Solar initiative. This programme seeks to accelerate the adoption of privately funded solar power in developing countries. The IFC, along with the Finland-IFC Blended Finance for Climate Programme, the European Investment Bank, and Proparco, financed the Kahone and Kael solar plants in Senegal, costing about $41million. Operational since 2021, these facilities have a combined capacity of 60MWac.
Both plants supply power to 540,000 people at some of the lowest tariffs in sub-Saharan Africa and prevent approximately 89,000 tonnes of CO2 emissions annually.
As Africa confronts a diverse array of climate challenges across short-, medium-, and long-term horizons, securing funding from Development Finance Institutions (DFIs) for key climate adaptation and mitigation projects becomes crucial. AfDB estimates the cumulative financing needs for Africa to respond adequately to climate change at about $2.8 trillion over the 2020-2030 period. The needs are mainly split across four sectors: transport (58 per cent), energy (24 per cent), industry (7 per cent), and agriculture, forestry, and other land use (AFOLU) (9 per cent). Countries will need to develop comprehensive national climate policies and strategies, foster an investment-friendly climate, and prepare a portfolio of projects ready for investment. This strategic positioning is essential for attracting and harnessing the necessary funding to address the continent’s climate risks effectively.