The workshop comes close on the heels of the Africa Climate Summit that brought together global key players in Nairobi. António Guterres, the United Nations Secretary-General, told the conference, “Africa is home to 60 percent of the world’s best solar resources — but only two percent of global investments in renewable energy over the last two decades. Now is the time to bring together African countries with developed countries, financial institutions and technology companies to create a true African Renewable Energy Alliance.”
The focus on green and sustainable finance primarily revolves around mitigating climate risk. However, the potential for banks to maximize opportunities through climate action is often underestimated. As banks face mounting pressure from customers, shareholders, investors, and regulators, they are compelled to align their corporate strategies and lending criteria with Environmental, Social, and Governance standards.
Speaking at the workshop, Mr. Patrick Lumumba, AGF Group Director of Capacity Development, emphasized that carbon projects have become essential in channeling funds across various sectors of the economy, expediting transitions towards a sustainable future. However, banks often lack comprehensive data to assess the risks and returns associated with carbon projects. They also lack information about effective market entry strategies, growth-oriented business models, risk management, and prudent portfolio construction practices.
“Today’s workshop is a clear example of AGF’s capacity development efforts in action to enable the banking sector to venture into carbon markets by increasing financing of clean cooking projects. Prioritizing this sector directly impacts several Sustainable Development Goals such as gender equality, good health and wellbeing, and climate action,” stated Mr. Feisal Hussain, CCA Senior Director of Innovative Finance.
According to Mr. Hussain, banks play an essential role in realizing the full potential of the carbon markets by helping to fill the financing gap required to initiate and scale up carbon projects. This is crucial in accelerating the clean energy transition and transforming the lives of people who currently do not have access to clean cooking fuels and technologies.
“The new Partnership Platform for Clean Cooking Finance is key to this endeavor as it brings together several distinctive capabilities: CCA’s convening ability and technical expertise on clean cooking; AGF’s focus on Africa and de-risking investments, with a commitment to green finance; and UNCDF’s capital mandate for emerging markets,” Mr. Hussain added.
About the African Guarantee Fund: The African Guarantee Fund (AGF) is a non-bank financial institution that aims to promote economic development, increase employment, and reduce poverty in Africa by providing financial institutions with guarantee products and capacity development assistance specifically intended to support SMEs in Africa.
AGF was founded by the government of Denmark through the Danish International Development Agency (DANIDA), the government of Spain through the Spanish Agency for International Cooperation and Development (AECID), and the African Development Bank (AfDB). Other shareholders include the French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), and KfW Development Bank.
AGF has a rating of AA- by Fitch Ratings Agency.
About the Nordic Development Fund: The Nordic Development Fund (NDF) is a multilateral development finance institution established in 1988 by the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). NDF provides grants and concessional loans for climate change and development activities in developing countries.
About the Clean Cooking Alliance: The Clean Cooking Alliance (CCA) works with a global network of partners to build an inclusive industry that makes clean cooking accessible to the 2.3 billion people who live each day without it. Established in 2010, CCA is driving consumer demand, mobilizing investment to build a pipeline of scalable businesses, and fostering an enabling environment that allows the sector to thrive. Clean cooking transforms lives by improving health, protecting the climate and the environment, empowering women, and helping families save time and money.
About the Kenya Bankers Association: The Kenya Bankers Association (KBA) is the umbrella body of the banking industry representing the interests of the sector in Kenya. KBA was founded on July 16, 1962, with the current membership standing at 47 banks.
SOURCE Clean Cooking Alliance