The African Development Bank (AfDB) is calling that development financial institutions and other investors focus on high-impact, high-growth potential start-ups that can drive climate-related innovation.
In a recently published scoping study on implementing Nationally determined Contributions (NDCs) in Africa, the AfDB identifies opportunities and entry points for private sector participation in NDC implementation in Africa with a focus on five pilot countries: Egypt, Morocco, Mozambique, Nigeria and South Africa.
NDCs are at the heart of the Paris Agreement and the achievement of long-term climate goals, embodying efforts by each country to reduce national emissions and adapt to the impacts 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 AfDB says.
“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.
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.
Last year, the AfDB launched the Private Sector Investment Initiative for African NDCs, that aims to build the capacity of African businesses to mainstream climate change into their business operations and identify opportunities that advance NDC goals.