AfDB, Denmark Strike Deal to Expand Green Finance and Private Investment

The African Development Bank Group and Denmark have agreed to deepen cooperation on green finance and private investment in Africa through 2030, as access to concessional funding tightens for many countries on the continent.

AfDB President Sidi Ould Tah and Denmark’s Foreign Minister Lars Løkke Rasmussen signed a memorandum of understanding in September to strengthen collaboration on mobilising private capital, financing climate-related projects and supporting economic development.

The agreement prioritises blended finance, guarantees and risk-sharing mechanisms to attract private investment into development projects. The two sides will engage with Denmark’s Export and Investment Fund and Impact Fund Denmark to identify opportunities for deploying these instruments.

Cooperation will focus on renewable energy, climate adaptation, water security and green infrastructure, building on more than a decade of Danish support for the Bank’s development initiatives.

The memorandum also provides for greater exchanges of economic analysis, policy research and technical expertise. Other priorities include job creation, expanding economic opportunities for young people and strengthening resilience in countries affected by fragility and conflict. Regular consultations will identify projects where the two institutions can combine their resources and expertise.

“Africa’s financing challenge is not simply about finding more money. It is about using every source of capital more effectively and directing it towards the priorities that can transform economies,” Ould Tah said.

He cited Denmark’s increased contribution to the African Development Fund and its backing for new financing instruments as examples of its support for development finance. The agreement is also expected to build on existing arrangements for Danish-funded specialists to work with the Bank.

Rasmussen said the partnership would advance shared priorities, including economic growth, employment and energy access.

Denmark contributed 300 million Danish kroner in 2011 to establish the Sustainable Energy Fund for Africa, which supports renewable energy projects. It has also financed Bank initiatives in water, infrastructure, urban development and climate-related finance.

Denmark has been a shareholder of the African Development Bank since 1982 and a contributor to the African Development Fund since 1973. It recently pledged 1.17 billion Danish kroner to the Fund’s 17th replenishment, a 40 percent increase from its contribution to the previous replenishment.

The African Development Fund provides concessional financing to low-income African countries, making it an important source of development funding for governments with limited access to affordable capital.

Source: FSX Business News