Exclusive interview with Audrey-Cynthia Yamadjako, Senior Climate Finance Officer at the African Development Bank, Coordinator for the Green Banks Initiative in Africa.
Formerly of Nataxis, PricewaterhouseCoopers (PwC) and Crédit Agricole Corporate & Investment Bank, Audrey-Cynthia Yamadjako joined the African Development Bank in 2016, more specifically in the Climate Change and Green Growth Department in which she is in charge of managing financing of 5 climate and environment funds. This represents an investment portfolio of 1.5 billion dollars for 150 multi-sector projects in renewable energies, energy efficiency, smart agriculture, resilient infrastructure, clean transport etc… Since September 2021, she coordinates the so-called “Green Banks” initiative. An innovative initiative led by the African Development Bank (AfDB) and which aims to promote the creation of a vast ecosystem of green banks in Africa. In this interview, Audrey-Cynthia Yamadjako calls on African banks and financial institutions not to miss the shift to green finance. Exclusive.
So what is a “green bank”?
A Green Bank or Green Facility is a financial instrument with a mandate to fund sustainable projects that mitigate environmental impact and promote adaptation to climate change. A green bank can be created directly for this purpose or can be a funding envelope directly housed within a commercial bank. African financial institutions still have relatively little access to this green finance, which nevertheless represents a real opportunity at the local level to support sustainable development. The idea is to strengthen their knowledge of green projects, on how to structure them, assess them in terms of risks, finance them by making them bankable through the use of mixed financing (or blended finance). This financing model often used for sustainable development projects has the particularity of backing private capital, public concessional resources (donations, loans at concessional rates, etc.) which de-risk and make the project attractive.
What interest for our governments and African commercial banks ?
Climate finance amounts globally to USD 632 billion, it must be multiplied by 5 by 2030 in order to achieve the objectives in the fight against climate change. For Africa alone, this opportunity is estimated at USD 2.800 billion. The gap is significant. In 2021, the continent was only able to capture 3% of global climate finance volumes, i.e. USD 20 billion. It is therefore essential to equip ourselves at the local and regional level with tools such as green banks which will be able to capture these international resources, mobilize them at the local level and invest them, by targeting national priority sectors, in sustainable development projects a strong economic, social and environmental impact.
What is the African Development Bank doing to help its member states acquire such instruments ?
The AfDB very quickly identified this innovative mechanism as representing an opportunity for our States in achieving their objectives in the fight against climate change and for green growth. It began by assessing the potential of this mechanism in 6 African countries (Zambia, Mozambique, Uganda, Tunisia, Ghana, Benin). The results of this study were notably presented in November 2021 in Glasgow during COP26, which also witnessed the launch of the flagship program for accelerating adaptation in Africa (AAAP), including green banks in its pillar on innovative financial initiatives for Africa. The AAAP is a joint initiative of the African Development Bank and the Global Center on Adaptation (GCA). The program aims to mobilize US$25 billion by 2025 to accelerate and scale up climate change adaptation action on the continent. This year, the AfDB has already undertaken to mobilize technical assistance that will help local and regional commercial banks to create and capitalize their own green investment vehicle. In addition, the Bank wishes, by 2023, to provide Africa with a fund of 1.5 billion US dollars dedicated to supporting this ecosystem of African green banks through the provision of technical assistance, capitalization resources and concessional investments.
What are the criteria for accessing these resources ?
In this initiative, the Bank supports the comprehensiveness of its regional members and will work with local banks that demonstrate a real sustainable strategy, have the desire to green their investment portfolio, have strong local roots and present a portfolio project dynamics. The technical assistance provided will allow, among other things, to develop their pipeline of green and adaptation projects. The green banking model is a mechanism that has demonstrated its effectiveness at the global level in greening the investment portfolios of local financial actors and in mobilizing resources dedicated to green growth. We have seen this very clearly within the African Development Bank itself, which allocates 40% of its investments to climate finance and continues to increase its ambitions by doubling its climate finance to 25 billion dollars by 2025.