World Bank Group brings $22.5bn to churn climate actions in Africa
The World Bank Group made several announcements on Wednesday, during the third One Planet Summit to scale up support for both climate adaptation and mitigation in Africa.
With continued strong support for IDA, the World Banks’s fund for the poorest, this will provide $22.5 billion to Africa for climate adaptation and mitigation for the five years from 2021-2025. This more than doubles the commitment to climate-related projects over the last five years.
The funding is part of the Group’s 2025 Targets to Step Up Climate Action, launched in December 2018 during the UN’s COP24 in Poland. It will help African countries manage the risks of a changing climate while unlocking new investment opportunities. International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), the Group’s private sector arms, will also continue to ambitiously grow their climate activities in Africa.
Recognising that a number of countries in Africa are among the most vulnerable to global climate shocks and stresses, and in line with these new climate financing commitments and future direction of Group’s Africa Climate Business Plan (ACBP), more than half of the $22.5bn financing will be devoted to supporting adaptation and resilience in Africa.
This year, for example, the World Bank will provide the government of Ethiopia with a results-based support program for adaptation and resilience, the largest done by the World Bank ever in Africa. The new operation, which is currently under preparation, will provide $500 million for results in improved watershed management and land administration systems.
“People across Africa are already experiencing the growing impacts of climate change. This region is particularly vulnerable to increasing floods, droughts and destructive storms,” said Interim President of the World Bank Group, Kristalina Georgieva. “We have to do more and do it faster, or millions of people could be plunged into poverty. That’s why the World Bank is providing more money to build resilience and help communities cope with the effects of climate change in Africa.”
In addition, the World Bank will carry out intensive Nationally Determined Contributions (NDC) engagements with Rwanda and Kenya, under the framework of the NDC Partnership, and with generous support from Germany’s Federal Ministry for Economic Cooperation and Development (BMZ). The engagements will help accelerate the implementation of, and raise the level of ambition for, their NDCs by supporting systematic mainstreaming and institutionalisation of climate adaptation and mitigation across and within key development sectors and governance levels.
The World Bank, as trustee of the Carbon Initiative for Development (Ci-Dev) trust fund and Kenya Tea Development Agency Power Company Ltd. (KTDA Power), signed an Emission Reductions Purchase Agreement (ERPA). The contract purchases carbon credits from small hydropower plants, providing power to 350,000 smallholder tea farmers and 39 of their regional tea factories in Kenya. The new ERPA brings the Ci-Dev portfolio to more than $73 million in implementation.
IFC syndicated a loan for KTDA, and the carbon revenues from Ci-Dev helped increase the project’s debt service coverage ratio and improved the bankability of the project. KTDA is a long-standing private sector partner of IFC. In addition to the hydropower project, IFC invested in a Mombasa warehouse project and supported KTDA with various advisory activities such as financial literacy training for farmers, soil testing for productivity improvement and as development of a wood sourcing strategy among others.
IFC was also named Green Bond Development Bank of 2018 at this year’s Green Bond Pioneer Awards. IFC was awarded this premier recognition for its global leadership, best practice, and innovation in green finance for products such as the inaugural Forests Bond in Kenya, which was a first-of-its kind solution to build capital markets infrastructure to catalyse funding into forest protection.
The summit was convened by President Uhuru Kenyatta of Kenya, President Emmanuel Macron of France, Interim President of the World Bank Group, Kristalina Georgieva, and Deputy Secretary-General of the United Nations, Amina Mohammed.