Development finance institution the African Development Bank (AfDB) Group has approved $10-million in funding for the Alliance for Green Infrastructure in Africa – Project Development (AGIA-PD) fund.
The AGIA-PD seeks to help accelerate the continent’s green transition by collaborating with African countries and the private sector, internationally and locally, to prepare and develop resilient, transformative green infrastructure projects and programmes quickly and at scale.
It will be implemented through three pillars. The first pillar will be focused on project preparation and seek to raise $100-million in donations upstream for targeted activities. The second pillar will be focused on project development using the AGIA-PD mechanism to raise $400-million in blended capital to transform green infrastructure project concepts into bankable opportunities.
The third pillar is investment and finance that involves establishing a framework to facilitate the mobilisation of $10-billion in funding, such as from treasury stocks, loans and risk mitigation instruments, to provide large-scale funding for green infrastructure projects prepared and developed under the first two pillars.
The AGIA-PD fund will run for 15 years and should reach its capitalisation target in three years. Its blended capital structure combines donations and first- and second-rank treasury stocks for a total of $400-million.
About $175-million in commitments were announced at the twenty-eighth Conference of the Parties to the United Nations Framework Convention on Climate Change, in Dubai, in December 2023, which included a potential contribution of $40-million from the AfDB and a commercial investment of $10-million approved by its board for a current total of about $215-million.
The AGIA-PD targets investors including multilateral development banks, impact funds, governmental organisations, sovereign funds, regional and non-regional institutional investors, commercial investors and philanthropists.
“The AGIA-PD is a strategic investment, co-managed by the bank, to transform concepts into bankable green infrastructure projects quickly and at scale.
“It will invest in the development of green infrastructure projects to produce a financial yield and to have an impact on development. It will seek support from the private sector to develop transformative, green, resilient projects that will fill Africa’s infrastructure gap for the long term,” said AfDB private sector, infrastructure and industrialisation VP Solomon Quaynor.
“The AGIA’s vision is to speed up the deployment of transformative green infrastructure projects by creating a robust partnership between the different actors and targeting the entire green infrastructure project preparation, development and funding ecosystem, working with both emerging and established actors.
“The ultimate objective is to accelerate the continent’s green transition, while drastically reducing the shortage of infrastructure,” added AGIA global ambassador Amadou Hott.
The AGIA-PD target sectors and investments in climate change mitigation projects are aligned with the beneficiary countries’ nationally determined contributions, as well as the AfDB's High 5 strategic priorities and with the bank’s Climate Change and Green Growth Strategic Framework 2021-2030.
The AfDB's five strategic priorities include lighting up and powering Africa, feeding Africa, industrialising Africa, integrating Africa and improving the quality of life for the people of Africa.