Jakarta – In response to the unfulfilled promises of climate finance from developed nations, several African countries are taking matters into their own hands by establishing green banks, reports said. Egypt, Morocco, Benin, and Ivory Coast are initiating the creation of these environmentally focused financial institutions under the guidance of the African Development Bank.
Audrey-Cynthia Yamadjako, the principal climate officer at the African Development Bank, told Bloomberg News that Rwanda, already in the process of establishing its green bank, is set to commence lending to climate projects in 2024. The move comes as a proactive response to the persistent delay in fulfilling a 2009 pledge by developed nations to provide USD 100 billion in annual climate finance for developing countries, particularly those adversely affected by climate change.
According to data from the Organization for Economic Cooperation and Development, this commitment was only met last year, leaving a significant gap in funding for climate-related initiatives. The pressing need for infrastructure to withstand extreme weather, combat droughts and floods, and construct clean-energy plants across Africa has prompted the establishment of local green banks. These banks are designed to access concessional finance and provide loans in local currency, thereby reducing project risks.
Yamadjako said the necessity to diversify and find alternative solutions for Africa. The African Development Bank, with support from the Green Climate Fund, has raised USD 142 million for Rwanda’s green bank, including contributions from the bank itself, the Global Climate Partnership Fund, Denmark’s Danida, Agence Francaise de Developpement, and the UK government. The bank anticipates collaborating with private institutions to co-fund projects through a blended finance approach.
She said, “It’ll be a model for the African region, especially African governments, to have their own national green banks.” Despite the progress, the funds raised remain insufficient to address the challenges posed by rising temperatures and more extreme weather events. Rwanda alone estimates a need of USD 11 billion by 2030 in its Nationally Determined Contribution submitted to the United Nations.
“We are a long way from meeting the needs,” Yamadjako cautioned, underscoring the urgency of addressing the financial gaps in a region she identified as the most affected in the world.
Tax reform for Africa
On 22 November, the UN General Assembly passed historic resolution A/C.2/78/L.18/Rev.1, titled “Promotion of inclusive and effective international tax cooperation at the United Nations”. Presented by the African Group, the resolution garnered 125 votes in favour of the Tax Convention, with 48 votes against and 9 abstentions.
This landmark achievement reflects a substantial stride in global tax reform, signalling the African Group’s commitment to a fairer and more effective global tax system. The resolution offers hope for developing nations by facilitating access to essential financial resources to address current debt crises and support sustainable development, aligning with the African Union Agenda 2063. (nsh)
