Private sector participation in climate agenda

African Development Bank scoping study identifies opportunities for private sector participation in Africa’s climate agenda

African Development Bank scoping study on implementing NDCs in Africa recommends that development financial institutions and other investors focus on high-impact, high-growth potential start-ups that can drive climate-related innovation.

The study, NDC implementation in Africa through green investments by private sector – A Scoping Study, was produced in partnership with the Fund for African Private Sector Assistance and launched during a virtual African Development Bank webinar held on 1 July 2021. 

Government and development institutions must engage the private sector in efforts to develop the green economy and meet Africa’s commitments under the Nationally Determined Contributions of the Paris Agreement of Climate Change

According to the study, Climate action offers profitable opportunities for the private sector but will also help protect those investments from climate impacts. Governments should be encouraged to see the private sector as a critical partner for climate action and create the enabling policy and regulatory environments that enable private sector innovation.

“The African Development Bank has pledged to mobilize $25 billion towards climate action on the continent by 2025. The NDCs developed by African countries as part of the Paris Agreement will require an estimated $3 trillion of investment by 2030, of which at least 75% is expected to come from the private sector, which has a crucial role to play,” said Al Hamndou Dorsouma, the Bank’s Acting Director of Climate Change and Green Growth.

The study identifies opportunities and entry points for private sector participation in NDC implementation in Africa with a focus on five pilot countries, for which studies were also produced. These are Egypt, Morocco, Mozambique, Nigeria and South Africa.

According to the main Africa-wide study, only five African countries have carefully considered the role of the private sector in their NDCs: Burkina Faso, Ghana, Morocco, Niger and South Africa. Private-sector participation in African NDCs needs to be strengthened, said Dorsouma.   

The African Development Bank has a number of initiatives to support the achievement of national NDCS. Last year, it launched the Private Sector Investment Initiative for African NDCs. The initiative aims to build the capacity of African businesses to mainstream climate change into their business operations and identify opportunities that advance NDC goals.  The Bank provides knowledge products and climate change tools to support this.

Under the initiative, the Bank has trained SMEs and financial institutions from six countries on strategies to identify climate risks and opportunities in their businesses and estimate the impact of their business activities on greenhouse gas emissions.