Date/Time: 9 Sept.2022, 10:00-11:30am

Location:  Almasa Convention Center, Cairo

Dear guests, panelists,
On behalf of UNDP, I am pleased and honored to participate in this important discussion on Innovative climate finance for the Africa region.

Africa is a highly complex region – blessed with natural capital and biodiversity; home to 1.4 billion people, and a rich and diverse culture, yet also experiencing protracted conflicts and other crises, including the climate crisis. Increasingly, climate change, natural, and man-made disasters are undermining years of hard-won development gains.

As a climate risk hotspot, climate financing is a top priority in the region and a strong recommendation and priority moving forward is to scale up innovative climate financing, and to ensure that such finance benefits the most vulnerable and the planet. In UNDP, we promote much needed climate financing and innovations in a comprehensive manner. Our experience points to the following: 1) developing national frameworks 2) building the long-term policy and institutional environments needed to sustain the financing needed to achieve SDGs; and 3) testing and scaling up specific innovations and tools.

UNDP’s flagship Climate Promise initiative has supported 96% of countries in Sub-Saharan Africa to enhance climate ambitions, align NDCs with national policies, and mainstream climate change into local and sectoral development planning. Through the Climate Promise, 95% of revised climate action plans include outreach to the private sector. The enhanced NDCs require support to finance and for turning NDC objectives into bankable projects (e.g., Burundi) while others are looking to establish national climate funds to facilitate project development and implementation (e.g., Cote d’Ivoire). We are developing solutions at both levels.

In addition to the above, in the Arab States region, we will be setting up the Green Arab States Facility for Transition or GAFT which will scale up green transitions across the region and will also harness expertise to develop such bankable projects.

Climate financing also needs to be embedded within national financing strategies. To achieve this, UNDP has developed integrated national financing frameworks (INFFs) which are a planning and delivery tool to help countries strengthen planning processes and overcome obstacles to financing sustainable development and the SDGs by identifying financing gaps to be plugged by national as well as international private and public sources. UNDP assists a growing number of countries to use INFFs to direct investment in their national climate action plans.

Gabon, for example, is supporting the transition from an extractives-based brown economy to a greener economic model through its financing framework. Gabon is developing a green tax, including on carbon and the use of energy-intensive technologies, along with incentives for green investments and green financing instruments, such as green and social bonds.

In Morocco, the NDC implementation agenda envisages approximately $50 billion of new climate mitigation and adaptation actions envisaged as part of its NDC implementation agenda. UNDP with support from Global Environmental Fund (GEF), is now developing an initiative to promote Integrated Planning and Innovative Financing for Sustainable Cities in Morocco. This will include enhanced financial planning, policies and legal frameworks to de-risk private sector investment at the municipal level, and to advance new business models and market instruments.

UNDP also develops, with a wide range of partners, innovative instruments to implement climate change adaptation and mitigation projects. With rising debt levels across the region, UNDP is promoting innovative financing tools such as green bonds and green sukuk to promote sustainable, green and resilient recovery from the pandemic. These instruments will crowd in financing without requiring large investments of scarce public resources and will support developing countries to sustain SDG climate-related investments. In addition, UNDP serves as Secretariat for the Sustainable Finance Working Group (SFWG). The SFWG sits in the G20 finance track, with ministries of finance and central banks helping shape the sustainable finance policy agenda.

UNDP has been advising and working with a number of countries on potential Debt for nature/climate swap initiatives, as well as advising various countries on potential structuring and issuance of Nature Performance bonds. With a particular focus on Africa, UNDP has established partnerships to support countries to issue green bonds that would provide a response to the demand countries are expressing for technical support through their INFFs. A partnership with Citibank has already started in Africa, working together on building domestic capacity on thematic debt instruments. Joint workshops have taken place in Cameroon, Senegal, Gabon, and Rwanda, with plans underway for additional sessions in Equatorial Guinea, DRC, and Congo Brazzaville. The objective of the UNDP-Citi partnership is to assist Governments in approaching capital markets to raise new funding through bond issues that will raise investments towards the SDGs.

UNDP is expanding its support to help countries identify barriers and risks that are holding back private climate investment, put in place de-risking policies and operationalize innovative financial instruments and new forms of partnerships.

In Sudan UNDP has implemented a Climate Risk Finance initiative, through a $6.5m grant from the Least Developed Countries Fund. This has helped design new climate insurance policies and brought to market the country’s first climate insurance products – an important market-based form of social protection to build the resilience of rural farmers from more frequent and severe climate induced disasters. Also in Sudan, UNDP’s Solar for Agriculture project, with a $4.9m grant from Global Environment Facility, has helped expand the use of decentralized solar solutions to power irrigation, while also supporting the design and establishment of a National Solar Fund as a means to scale up finance for NDC implementation and sustainable development goals.  

In the case of Djibouti, the country that imports a large portion of its electricity from hydro-powered technologies in Ethiopia, the development of geothermal energy and investments in solar energy technologies and exploration of wind energy potential has started to improve national energy security, reduce costs of transmission and enable communities to access energy across the country. The Ministry of Energy partnered with UNDP to develop the Djibouti Sustainable Energy Road Map for programming and implementation of energy priorities in line with Djibouti Vision 2035.

In Nigeria, UNDP has implemented an innovative De-risking Renewable Energy Investments project. The project supported the Government of Nigeria in developing Investment plans for the Nigerian Power Sector. It targeted solar PV primarily in order to achieve a transformation in the electricity mix such that at least 20GW of Nigeria’s electricity will be generated from solar PV by 2030. The design used a rigorous quantitative methodology based on UNDP’s Derisking (“DREI”) methodology. Today, Solar power lights up the lives of millions of Nigerians.

UNDP is implementing the Africa Minigrid Program (AMP) across 18 countries in Africa to support clean energy by increasing the financial viability of low carbon minigrids. The AMP is expressly targeting early-stage Minigrid markets, seeking to establish the enabling environment for subsequent private investment at scale. Through the AMP, we are supporting renewable mini-grids with a focus on cost-reduction levers and innovative business models in Comoros. The project will support access to sustainable, reliable, affordable and cleaner electricity in rural areas in Comoros, contributing to durable improved livelihoods and inclusive poverty alleviation while reducing GHG emissions.

To summarize; as we move collectively to expand climate finance, a need exists to establish an enabling environment at national and local levels and to ensure that climate finance benefits those most in need – often in an innovative way. This includes continued efforts to de-risk the policy environment, enhance institutional and regulatory systems, and forge the public-private partnerships needed to expand results. There are emerging options for enhancing affordability and accessibility of sustainable/ climate finance, including but not limited to, (i) scaling up innovative debt instruments including green bonds or alternative debt finance instruments by introducing policy incentives; (ii) developing the necessary infrastructure for domestic sustainable loan and bond markets and (iii) deploying digital technologies to reduce the costs of sustainable finance operations.

In closing, I would like to express our thanks to the Egypt Government for convening this important dialogue. UNDP in partnership with public and private partners stands ready to support developing countries in accessing climate finance and achieving the most needed goals of the Paris Agreement.