Africa contributes around 4% of global CO2 emissions but is among the most vulnerable to the negative impacts of climate change. These adverse impacts, which will be felt across many areas, from agriculture to healthcare, are likely to be severe because many African states lack, or have low levels of, adaptation capacity, due in part to low levels of investment.
Significant financial resources are required to adapt to and mitigate climate change risks and meet other critical development targets across sectors and states, such as those attached to the Sustainable Development Goals (SDGs), but the level of currently-available public finance is inadequate.
However, the infrastructure gaps that need to be closed present an opportunity for governments and private sector actors to integrate sustainability into the design and execution of development projects, which would facilitate inclusive, sustainable growth, and significantly reduce poverty and widening socio-economic inequality.
There is a growing consensus among relevant stakeholders that green finance should be a priority in Africa, as it is in other regions of the developing world. One financial instrument that could help to mobilize capital for significant climate action and sustainable development is the issuance of green bonds.
This brief highlights the findings of a recent report on “Scoping the Sustainable Finance Landscape in Africa: The Case of Green Bonds”. It summarizes the key developments in Africa’s green bonds market and discusses the key stakeholders driving the developments, the story behind the data and the use of proceeds. It also examines the market’s potential for growth, the challenges and opportunities involved in this and how it might be further developed.