Faced with the obsolescence of the global financial architecture, green bonds are gradually becoming an essential lever for supporting ecological and sustainable investments. Africa, which currently represents just 1% of this global market, has just joined the Global Green Bond Initiative (GGBI) through the African Development Bank (AfDB).
The global green bond market is expected to reach $2,200 billion by 2022, with Africa committing just $10 billion. This is clearly insignificant. To turn things around, the African Development Bank (AfDB) is joining the Global Green Bond Initiative (GGBI), a mechanism that brings together several financial institutions around the world to accelerate sustainable growth.
These include the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), Cassa Depositi e Prestiti d’Italia, the Italian Savings and Pensions Bank (CDP), the Spanish Agency for International Development Cooperation (AECID), French Development Agency (AFD) via its subsidiary Proparco, which is responsible for financing the private sector, and the Green Climate Fund (GCF).
Together, these development partners intend to “encourage the inflow of private capital from institutional investors into climate and environmental projects through technical assistance provided to green bond issuers, and by attracting private investors through a dedicated de-risked fund, which will act as lead investor in green bonds issued in emerging markets and developing economies (EMDEs), says Hassatou N’Sele, Vice President and Group Finance Director of the AfDB.
Green bonds to finance sustainable development
According to the institution, which is headquartered in Abidjan, Ivory Coast, the international coalition is expected to raise up to €20 billion in green investments. The partnership also plans to provide technical assistance to a number of countries, notably in Africa, in identifying green project reserves and building the capacity of economic players (mobilizing stakeholders, drawing up reports).
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Among the sectors to which the proceeds of these operations in Africa will be directed is agriculture. At least 283 million Africans suffer from hunger, yet the continent accounts for 65% of the world’s arable land. Food security, the second Sustainable Development Goal (SDG2), is therefore “the top priority” for the AfDB. In the second half of 2022, the group issued its first green bond in African currency, worth 19 billion Ugandan shillings ($5 million), to invest massively between now and 2025 in value chains resilient to climate change and the development of agricultural technologies (sensors, lasers and drones, etc.).
Benoit-Ivan Wansi
