You are here: HomeBusiness2023 05 25Article 657941

Business News of Thursday, 25 May 2023

Source: guardian.ng

AfDB rallies private sector behind $20b green growth projects

African Development Bank African Development Bank

African Development Bank (AfDB), yesterday, rallied the private sector investors and various governments to opportunities in the green growth infrastructure, for sustainable development in Nigeria and other African countries.

The bank, at the ongoing 2023 yearly general meeting in Sharm el Sheikh, Egypt, acknowledged that though the future of several African countries, within current realities, is bleak, there are great opportunities to turn the corner through an abundance of green resources.

Specifically, the stakeholders were unanimous that the continent must change its colonial mindset of only feeding global industries, to becoming an industrialised continent that is built on renewable energy.

President of the AfDB Group, Dr. Akinwumi Adesina, said that given the enormous potential that abounds in green growth, public sector investment must be complemented by mobilizing private sector resources.

Adesina said the continent must do more in green infrastructure space, through private sector financing of renewable energy, green urban infrastructure systems, green hydrogen, and climate resilience infrastructure.

He said: “Alliance for Green Infrastructure in Africa (AGIA) hopes to mobilise $500 million of project reparation and project development financing, using private equity platforms and to mobilise $10 billion of private sector financing for green infrastructure in Africa.

“But as the world transitions to electric cars, Africa stands to be able to attract billions of dollars in private investments for green global transport systems. Africa has 80 per cent of global deposits of platinum, 50 per cent of global deposits of cobalt, 40 per cent of nickel, and substantial deposits of lithium.

“Africa must not make the same mistake of the past. Africa must set itself up to manufacture lithium-ion batteries to tap into the future market that has been estimated to be worth trillions of dollars. The cost of establishing a lithium-ion factory in Africa is three times less expensive than in China and the United States,” Adesina said.

Though the future is full of challenges of climate change, the president reiterated, it also guarantees massive opportunities for green growth for Africa.

He advised Nigeria and other African countries to establish and implement national development plans on green transition, subsidise green industries for growth and sustainability, push for more commitment of the multilateral and financial institutions on risk investment, support for the development of bankable projects that can provide high-risk adjustable returns to the private sector, and existing public finance infrastructure should be transferred to the private sector to mobilise more investments.

Adesina added that for such mobilisation, the AfDB had launched the African Financial Alliance on Climate that brought together all financial institutions to green financial ecosystem, coupled with the Alliance for Green Infrastructure in Africa (AGIA).

He said besides dedicating financial portfolios to green infrastructure, the use of green bonds could also mobilise global green financing for African countries because the continent currently accounts for 0.2 per cent of the $2.2 trillion of cumulative green bonds issued up to 2022.

He said further that the AfDB had issued up to $10 billion of green and social bonds in the last 10 years, to support various green projects like electricity, water treatment plants, and climate risk covers in Cabo Verde, Madagascar, Egypt, among others.

Tanzanian Vice President, Dr. Phillip Mpango, noted that the erstwhile world order that confined Africa into the raw material bank of the advanced countries has changed, and African response to industrialisation should change too.

Mpango said contemporary Africa has a larger population and more needs that should warrant a comprehensive review of global financial and economic policies in favour of Africa.

In a related development, the Africa Investment Forum, at the conference, presented four renewable energy and sustainability projects worth nearly $1.5 billion to investors on the sidelines of the African Development Bank Group’s 2023 Annual Meetings.

The curated projects, which are drawn from all of Africa’s regions, are sourced from the Africa Investment Forum’s pipeline. They reflect gathering urgency in Africa, the world’s most vulnerable region to climate change, to accelerate climate action, including closing financing gaps by securing an ever-increasing share of global capital for the continent. From hydropower to plastic recycling green projects showcase ample opportunities on the continent

The transactions included a hybrid hydrogen feedstock/ ammonia project in North Africa that will source 400 MW of renewable energy to produce—without Co2 emissions— 183 tons of hydrogen feedstock daily to generate 1,000 tons a day of green ammonia via electrolysis. An additional investment of $27 million is needed to move the project toward bankability.

The second transaction, in West Africa, is a 27 MW hydropower project that has successfully undergone feasibility assessments. It has also attracted funding support from several international entities and multilateral development agencies. Among projected benefits, the deal will service 700,000 households, generate 600 direct and indirect jobs over the life of the project, and reduce Co2 emissions by 81,000 tons each year. The project represents an increase of 10% in the country’s total electricity generation capacity.