22nd July 2019 In Uncategorised

Opportunities For Private Sector Investment In Climate Action In Sub-Saharan Africa

In May 2019, the PRINDCISSA project released a policy brief which provides recommendations for policymakers to incentivise stronger private sector participation in the implementation of Nationally Determined Contributions (NDCs). International and domestic private investment flows will be essential to assist African countries in funding the transition to a low-carbon, climate-resilient future. However, there are intrinsic political transformations that will need to take place to promote investment.

In the lead up to the UNFCCC Conference of the Parties (COP) 21 in Paris, all Sub-Saharan African (SSA) countries submitted comprehensive and quantifiable countrywide mitigation and adaptation targets. The targets contained in NDCs are mostly conditional upon support. The funding gap requires the mobilisation of large amounts of private finance, exceeding current investment flows into African economies. Further research reveals private sector investment barriers to funding climate action in SSA. Private sector investment momentum will become more attractive by addressing factors that make the policy environment more receptive to foreign investment. The leverage points in this complex system require committed political leadership to drive policy reforms, coupled with public sector risk finance to build investable project pipelines.

Renewable Energy in Africa Addresses Key Development Goals

Renewable energy is one area that has massive potential for addressing the key development goals in Africa. The NDCs of 52 out of 54 African countries mention renewable energy, however, more than half of the NDC renewable energy targets are conditional on countries receiving climate finance support.

The underdeveloped energy sector in SSA creates both opportunities and challenges for future development and future emissions reduction pathways. The rapid deployment of renewable energy, coupled with energy efficiency, can achieve around 90% of the global emission reductions in the energy sector needed by 2050, while at the same time advancing economic growth and development. Madagascar is one of the success stories in this regard as it has secured funding from the Green Climate Fund (GCF) to implement the first GCF-funded adaptation project in Africa, which aims to build a resilient rural economy through distributed renewable energy projects and improved farming techniques.

Policy Recommendations

The PRINDCISSA brief offers several policy recommendations, including:

  • Integrating NDC commitments into national development strategies
  • Strengthening the investment climate
  • Avoiding competition with the private sector
  • Promoting innovation and learning from success and failures
  • Engaging the private sector to implement NDC targets

 

Encouragingly, the international investor community with trillions of dollars under management is starting to face up to the challenges and opportunities associated with climate change. African public sector actors should engage with the investment community to build trust and understand areas of concern particularly related to transparency and governance to ensure that their countries secure a meaningful proportion of private finance for climate action.

Download the policy brief and please share widely: Opportunities for Private Sector Investment in Climate Action in Sub-Saharan Africa

About PRINDCISSA

The private sector finance for NDC implementation in sub-Saharan Africa (PRINDCISSA) project was financed by the Swedish Energy Agency and implemented by the Stockholm Environment Institute, Perspectives Climate Research, and SouthSouthNorth. To learn more, visit https://www.sei.org/projects-and-tools/projects/prindcissa-private-sector-finance-for-ndc-implementation-in-sub-saharan-africa/

The views expressed represent those of the authors and not the Swedish Energy Agency.