Mobilising private-sector investment to mitigate climate change in Africa

What role can the private sector play in financing climate change-related mitigation in Africa? How can the public sector incentivise private investments most efficiently?

These are critical questions for achieving the Paris Agreement’s long-term goal of keeping global temperature rise to well below 2 degrees Celsius above pre-industrial levels.

Enhanced private-sector climate finance for developing countries’ nationally determined contributions (NDCs) is considered to be a crucial part of the policy picture. Yet, the levels of private finance that are widely believed to be necessary have yet to flow to some of the world’s most vulnerable countries: those in Sub-Saharan Africa, where support is needed for climate resilience and sustainable development.

Against this backdrop, this brief summarises key insights on the role of the private sector in finance instruments that can be used to address climate change-related mitigation in Sub-Saharan Africa. The brief focuses on those instruments backed by the United Nations Framework Convention on Climate Change (UNFCCC) and one national-level South African programme, which provides an illustration of the increasingly important interaction between multilateral and national support mechanisms.

This brief was written for the SEI-led project, “Private Sector Finance for NDC Implementation in Sub-Saharan Africa” (PRINDCISSA). The objective of the project is to assess how the private sector can be best incentivised to contribute to the financing of mitigation and adaptation activities as part of the implementation of NDCs. Funded by the Swedish Energy Agency, the project identifies possible synergies between mitigation and adaptation activities, and explores the role the private sector can have in supporting activities with mitigation and adaptation benefits.

The authors, Stephan Hoch, Valentin Friedmann and Axel Michaelowa, are researchers affiliated with Perspectives Climate Research, a non–profit environmental research organisation partnering in the project.