The Agence Française de Développement (AFD) and the African Export-Import Bank (AfreximBank) have signed a new €150m financing facility agreement, supporting the Afreximbank’s implementation of a new climate finance strategy.
The agreement will support Afreximbank in its implementation of the new climate finance strategy targeting green, low carbon, socially inclusive and more resilient investments across Africa.
The AFD has made a €500,000 grant available as part of the financing programme, with which it will carry out a technical assistance programme supporting the Afreximbank in developing the sustainable finance strategy.
By doing so, this strong partnership between the two institutions will be promoted through Afreximbank and its partnering institutions. This will see the expansion of innovative financing mechanisms for the sustainable development of the African continent.
The agreement is timely, particularly as Africa commences with the implementation of the African Continental Free Trade Agreement (AfCFTA) early next year. It is set to unlock new funding arrangements to finance sustainable projects and sectors that build the continent’s long-term competitiveness and resilience.
It is estimated that climate change negatively impacts Africa’s GDP by as much as 2.8% every year, or around $100bn.
In order to tackle the climate change challenges in Africa, financing solutions have to be developed via several methods. These include through external financial flows, as well as through the development of specific and more appropriate instruments that foster sustainable development.
Against this backdrop, accelerating investments in key channels for climate and pandemic resilience in the continent is a top priority for Afreximbank. Some of the continent’s main development challenges that it is looking to tackle in the time ahead include ensuring food security by strengthening agricultural value chains, whilst increasing access to water and sanitation.
The investments will also go towards improving living conditions, job creation through investments in resilient infrastructure, and ensuring the availability of affordable and sustainable source of energy for all. Additionally, financing will go towards supporting the creation of world class medical facilities and pharmaceutical industries.
The agreements were signed by Afreximbank Executive Vice-President for Business Development and Corporate Banking Amr Kamel, and Fabio Grazi, AFD Country Office Director for Egypt.
Kamel said that the facility signed with AFD was a huge opportunity for climate finance for African countries.
“It will create value from environmental assets and promote climate friendly investments to support African governments and African companies in their pursuit of infrastructure investments and will sustain their social and economic development,” He said
Grazi noted, “The agreement reaffirms AFD’s and Afreximbank’s commitment to propel the strategic partnership between our two institutions to new heights in support of Africa’s sustainable and inclusive economic development. The signing of this new agreement bases upon the shared vision that mainstreaming climate change and sustainable development goals into Africa’s financial sector is critical to tackle the challenges ahead and realise the opportunities available for the African continent.”