A very ambitious partnership for the climate
In line with the strategic objectives set by President Emmanuel Macron and the government in terms of climate and the reorientation of local financial flows, AFD Group in partnership with the Green Climate Fund (GCF) are launching a program of unprecedented scope. This program aims at supporting the transformation of local financial systems to combat climate change by making the concessional resources of the GCF and AFD available to countries and by capitalizing on AFD Group's longstanding experience in climate finance in developing countries.
The GCF approved a contribution of US$280 million to this program worth a total amount of more than US$750 million. This is one of the largest financial contributions of the GCF since its operationalization in 2015.
Transforming local financing practices in favor of the climate
The fight against climate change calls for the mobilization of local actors. It is crucial to encourage local financial institutions to change their financing practices in favor of the fight against climate change. A total of 17 developing and emerging countries will benefit from this support, with a strong focus on Africa1.
The program takes a flexible approach by providing financial resources and technical assistance tailored to the needs of financial institutions and their beneficiaries. This support will be earmarked to local public and private banks and microfinance institutions, in order for them to finance projects generating strong climate benefits. The projects will be run by companies, agricultural cooperatives or households. The program gives an important role to the financing of climate adaptation projects, since 40% of the funding will be dedicated to them.
Dual course of action: climate and sustainable development
The implementation of the Paris Agreement and the Sustainable Development Goals is central to the approach of AFD Group. As the French President called for at the One Planet Summit, the aim is to help redirect at least one third of financial flows towards low-carbon and resilient investments.
The program will have impacts in terms of combating climate change but also poverty and inequality. The partner financial institutions will invest in sectors as diverse as renewable energies, energy efficiency, sustainable management of natural resources, or climate-smart agriculture to ensure a sustainable and in-depth transformation of local actors' practices, consistent with a low-carbon and resilient development.
Local financial actors are essential to find a solution for the climate. The Paris Agreement calls for financial actors to redirect investments towards low-carbon and resilient pathways. AFD and its objective to be ‘100% Paris Agreement’, has consequently come up with an ambitious and innovative initiative in terms of scale and objective: over US$750 million to support the transformation of local financial systems in 17 countries, with a focus on Africa, to ensure that both climate change mitigation and adaptation projects access financing and that countries are able to implement the commitments made at COP21. By devoting US$280 million to this program, the Green Climate Fund is sending a strong signal and building a strong partnership with AFD Group. It reaffirms its crucial role in the implementation of the Paris Agreement.
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1 Benin, Burkina Faso, Cameroon, Côte d'Ivoire, Ecuador, Egypt, Kenya, Madagascar, Mauritius, Morocco, Namibia, Nigeria, Senegal, South Africa, Tanzania, Togo and Uganda.