AfDB's strategic efforts in mobilising private investment for green growth

Africa is poised to experience the second-fastest economic growth in the world, trailing only Asia, according to the 2023 African Economic Outlook report by the African Development Bank (AfDB). The report emphasises that this projected growth hinges on favourable global conditions and the continent's ability to enhance its economic resilience.

Released during the Bank's annual meetings in Sharm El Sheikh, Egypt, the 2023 Outlook anticipates Africa's GDP growth to reach 4.3% in 2024, up from 3.8% in 2022, and highlights that 22 countries are expected to achieve growth rates exceeding 5%.

The Bank Group’s Annual Meetings, which ended on Friday evening, allowed the Bank’s Board of Governors, African leaders and development partners to explore the practical ways of “mobilising private sector financing for climate and green growth in Africa”, this year’s theme. The Board has also approved management’s request to leverage the equity of the African Development Fund to mobilise more resources on the capital markets. When fully implemented, the Bank Group could unlock up to $27 billion to help low-income and fragile states through the Group’s concessional lending arm, the African Development Fund.

To attract private investors and encourage their participation in green projects, the AfDB has developed innovative financing mechanisms. One such initiative is the Sustainable Energy Fund for Africa (SEFA), which provides grants and technical assistance to support the development of renewable energy projects.

“African economies are moving in the right direction,” said AfDB’s President, Dr. Akinwumi Adesina, noting that five of the six pre-pandemic top-performing economies are set to be back in the league of the world’s 10 fastest-growing economies in 2023–2024.

The Success Story of the Benban Solar Park

The Benban Solar Park in Egypt serves as a remarkable example of mobilising the private sector for renewable energy development. Located near the city of Aswan, the Benban Solar Park extends over an area of 37 square kilometres and is one of the world's largest solar energy installations.

“The first time I came here, there was nothing but sand. Benban is now one of the largest solar parks in the world, with millions of photovoltaic panels, providing electricity to more than one million homes,” said Mostafa Adelfatah, the project manager.

This project is part of the strategy developed by the Egyptian New and Renewable Energy Authority, and the AfDB supported the project by bringing in investors such as Africa50. The investment platform acted as a bridge between the government and the private sector, and helped leverage around $450 million dollars into the Solar Park.

The Bank is committed to mobilising $25 billion by 2025 and wants to pave the way for a greener, more prosperous Africa but also go further: reducing the level of policy instruments and promoting inclusion and better coordination among multilateral development banks is the challenge of years to come.

On the independence of Africa, the governor of the central Bank of Egypt, former Chairperson, said : ”We need to work together in order to have our own funds, to make sure that the perception of our economies is closer to the reality, rather than being framed because of failures that are not of our doing.”

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