The European Investment Bank (EIB) Vice President Thomas Ostros announced that the multilateral lender had committed $50 million to support climate finance during the Africa Climate Summit.
In a press release on Thursday, September 7, EIB said the funding was in collaboration with two Equity Funds operating in Africa.
“A commitment of $40 million was to Acre Impact Capital’s Export Finance Fund I to support renewable power, health, food and water scarcity; sustainable cities; and green transport.
Export finance delivers long-term debt financing guaranteed by official export credit agencies (“ECAs”). This allows project sponsors to significantly reduce the cost of debt by both obtaining very attractive funding on the ECA backed financing and obtaining long-term financing,” said the EIB statement.
In addition, Camco Management Limited, which invests in clean energy deployment across Africa will receive $10 million.
Camco is working with Spark Energy Services to respond to the climate challenge by supporting a just energy transition with localized impacts through the deployment of fully financed on-site renewable energy and energy efficiency initiatives among local C&I businesses, with a particular focus on the SME segment.
Also Read: President Ruto Calls for Global Financial Model that Supports Climate-Positive Growth
The EIB Vice President, Mr. Ostros, expressed the need to green Africa’s financial sector.
At a side panel during the Africa Climate Summit, Ostros held a discussion with Equity Bank’s CEO James Mwangi.
Moreover, the two agreed that Multilateral Banks and other international financial institutions needed to do more to avail climate finance to Africa with a focus on accessibility, affordability and flexibility.
Also, multinational development banks (MDBs) and international financial institutions (IFIs) should be at the forefront in investing in green initiatives.
Africa Climate Summit: influence of the private sector
Regarding the role of the private sector, it was agreed that mobilizing private sector investment is crucial, both given the scale of investment needed and the importance of ensuring that climate action leaves a lasting legacy and delivers a commercial return, as stated by the EIB press release.
This has consequently led to lower availability of affordable capital for climate action projects while also driving project costs up, despite a lot of technological advancement in the sector.
Also Read: Kenya Hosts National Dialogue Summit on Health Financing
Some of the risks include economic and financial considerations around macroeconomic environment in Africa.
History of EIB’s climate finance grants.
However, this is not European Investment Bank’s first climate finance grant. In 2007, EIB issued the world’s first green bond dubbed the Climate Awareness Bond.
To date, the European Investment Bank has committed $2.6 billion in over 124 funds, a fact that was stated in the press release.
These funds have been used to support sectors ranging from private equity, infrastructure, and microfinance within the geographical focus of Africa.
Jointly, these funds have provided financing via equity and /or debt to approximately 1,500 investees in Africa.
