African Development Bank to Integrate Natural Capital at the Heart of Africa's Development Finance
17-09-2021 10:03:18 | by: Bob Koigi | hits: 1551 | Tags:

The African Development Bank has launched a new program that aims to accelerate the integration of natural capital in the financing of Africa's development.

Funded by the African Development Bank, the German Federal Ministry for Economic Cooperation and Development (BMZ) and the MAVA Foundation for Nature, the Natural Capital for African Development Program Development Finance, NC4-ADF ) was inaugurated during a solemn ceremony organized by videoconference.

The NC4-ADF aims to accelerate the inclusion of natural capital in infrastructure financing projects in Africa, and to achieve consensus among multilateral development banks (BDMs) and other partners on the need to take natural capital into account in financing for Africa's development. The African Development Bank is working with other BDMs (World Bank, Inter-American Development Bank, Asian Development Bank and European Investment Bank) to strive for a common goal and share best practices for integrating natural capital into the development finance architecture.

The program's partners include the Green Growth Knowledge Platform, the World Wide Fund for Nature (WWF), the German Agency for International Development Cooperation (GIZ, Deutsche Gesellschaft für Internationale Zusammenarbeit) and the Economics for Nature (E4N) partnership. Government and private sector officials, delegates from multilateral development banks, including the World Bank and the Asian Development Bank, and experts attended the launch ceremony for the program, which runs for the period 2020-2022.

“Africa has enormous potential for renewable and non-renewable resources, including agriculture, forestry, blue economy, energy, extractive industries, which are the cornerstone of natural capital and could be the foundation for '' a green recovery in the continent, said Professor Kevin Chika Urama, Senior Director of the African Development Institute, Chief Economist and Acting Vice President of Economic Governance and Knowledge Management at the African Bank of development.

“At the African Development Bank, we recognize that natural capital and biodiversity are essential for economic growth. We understand that there are direct and indirect links between the risks associated with the degradation of natural capital and the loss of biodiversity and the financial and productive sectors, ”he said.

For Kevin Chika Urama, “the recovery from Covid-19 offers African countries an exceptional opportunity to lay the foundation on which natural capital-based approaches will be built in the short term for economic recovery and in the long term for sustainable development. , including the achievement of the ambitious aspirations set out in Africa's Agenda 2063, the UN's Agenda 2030 and the Paris Climate Agreement. "

"The African Development Bank is one of the leading institutions for development finance," said Niels Breyer, administrator at the African Development Bank for Germany, Luxembourg, Portugal and Switzerland. The program will lay the foundations for a more coherent integration of natural capital within the framework of its financial operations and its support to regional member countries. It will be necessary to exploit the Bank's potential to conserve natural assets in Africa and use them in a sustainable manner for the benefit of all populations and to increase investments to fill the current financial gaps. "

Natural capital, the stock of renewable and non-renewable natural resources, includes land, water, air, forests, minerals and biodiversity. In Africa, it represents between 30% and 50% of the total wealth of countries. However, it is rarely taken into account in economic measures such as the calculation of GDP. International institutions do not take it into account in development financing. In the face of climate change, natural capital nevertheless represents essential assets to promote inclusive and green growth.

“Given its immense wealth in biodiversity, Africa offers enormous potential for integrating natural capital approaches into infrastructure projects,” said Nathalie Bernasconi-Osterwalder, Executive Director at the International Institute for Sustainable Development, program partner. To date, the challenges of integration persist, largely due to a lack of good practices, data and metrics. To overcome these obstacles, we need to share case studies and take stock of natural capital in infrastructure. We need to strengthen markets and foster better collaboration between stakeholders. "

“Over the past four years, the African Development Bank has worked closely with GGKP, other partners and donors, multilateral development banks and global financial institutions to mobilize actions for better integration. nature in economic policies, infrastructure financing and investment flows. This gave rise to NC4-ADF, ”recalled Dr Vanessa Ushie, Head of the Policy Analysis Division at the African Natural Resources Center of the African Development Bank and co-chair of the NC4-ADF program.

Several African countries (Madagascar, Mozambique, Nigeria and Tanzania) are already participating in the implementation of NC4-ADF. In Tanzania, the Kakono hydropower plant benefited from this.