Investing time: The growth of green finance in West Africa

How Green Invest Africa is changing the regional financial landscape

A cooperative of farmers harvest cocoa in Côte d'Ivoire. Nestlé
26 May 2022
26 May 2022

Sustainable investment is on the rise. According to the World Bank, investments that promote sustainable development and climate goals have increased 34 percent over the past two years, now amounting to some USD 39 trillion.

However, this money is not spread equally around the world, and Africa in particular has received little despite needing it the most. Only 3 percent of climate finance, for example, is invested in the continent.

Among the players trying to change this is Green Invest Africa, a climate finance advisory firm whose activities reach far beyond its headquarters in Côte d’Ivoire to educate, engage and transform the financial interactions and portfolios of players at every level of the financial pyramid, from family farmers to international banks.

Green Invest Africa was created by Ivorian agroeconomist and national climate specialist Marc Daubrey, who wanted to expand the work of his non-profit sustainable development organization Impactum Africa to include more social entrepreneurship. Now, it has grown to be one of the most catalytic green finance institutes in West Africa.

Here, alongside the 15th Conference of the Parties to the United Nations Convention to Combat Desertification (UNCCD COP15) hosted in Côte d’Ivoire, Landscape News spoke with Daubrey, who now serves as its CEO, and senior advisor Pierre-Joseph Kingbo about how their work is shaping not just the financial landscape of their region but the social and ecological too.

This interview has been edited for content and clarity.

How is the green finance sector in West Africa different or similar to the green finance sector in Africa as a whole?d

P-J K:

First, let’s start with a working definition of green finance: a strategic approach to incorporating the financial sector into the transformation process toward low-carbon and resource-efficient economies, in the context of adaptation to climate change. In short, green finance is any structured financial activity that’s been created to ensure a better environmental outcome.  Globally, the green bond market could be worth USD 2.36 trillion by 2023, according UN estimates. The U.S., China and Europe are at the head of the pack in terms of green Finance.

In the African context, Morocco, East Africa and South Africa seem more advanced than West Africa in green finance. Kenya and South Africa have more accredited entities to the Green Climate Fund (GCF) that here in Côte d’Ivoire. At Green Invest, we are helping a few national public and private institutions get their accreditation to the climate funds. However, for the few handpicked national institutions that have been accredited, there is not yet in place a systematic way for them to share with others their experience of going through the accreditation process. We think that their unique experience could benefit the other institutions that are going or intend to go through the accreditation process to a climate fund such as the Adaptation Fund or the GCF. Right now, each institution from Côte d’Ivoire that is going through the accreditation process is doing so from scratch, and each institution is learning through its own processes and painful experiences.

What are some of the main challenges for the green finance sector in West Africa?

P-J K: What is missing is an inventory of all green funds worldwide and those operating in Africa. That information is lacking, and often, what is available about green funds is available in English only, whereas West Africa has a lot of French-speaking countries. So there is a language barrier for accessing information. You have a lot of green finance for infrastructure or for agriculture or for transport or for energy. But it’s hard to get a panoramic view of all these funds. Institutional communications and centralized information needs to be improved.

And then also, these financiers from the various green funds don’t always listen to beneficiaries. They don’t really care about what beneficiaries think and what processes could have been simplified to make funds more quickly available. We need this feedback.

Financial systems in West-Africa tend to be characterized by a dominant banking sector, and large parts of the economy remain unserved by the formal financial sector. Financial inclusion remains a work in progress.

Another challenging dilemma for many West African countries is the fact that they face a tension between the need to expand their electricity supply and reduce fossil fuel intensity. There are trade-offs to be made. Similarly, green finance is an area where banking and microfinance regulators must be careful that lending requirements do not result in reduced overall lending or higher rates.

Indeed one of the major challenges for green finance globally is getting adequate funding into the pockets of smallholders. How is Green Invest Africa trying to advance this?

P-J K: We are working with a few big corporations in agribusiness. For example, in the cocoa value chains, these big corporations are willing to pay for us to train smallholders to develop certain capacities in agroforestry. And then because they are trained, these smallholders can develop some activities that microfinance banks are ready to finance. Our other approach is to work with some banks and some guarantee companies such as the African Guarantee Fund. Guarantee funds are willing to help the banks that will give small loans to certain green activities of cooperatives, smallholders and green SMEs. These are examples of the partnerships we have: dealing between banks, microfinanciers, guarantee companies and the smallholders.

MD: To rebound on that, we’re also working on developing specific tools. One is the “Financial Sustainability Mechanism” – the FSM – to provide more and better sustainable finance to farmers and communities. This FSM is based on the experience of the first PES (payments for environmental services) in Côte d’Ivoire in the cocoa value chain. And then Green Invest Africa is also working on getting more carbon value and carbon rights to local communities through benefit-sharing mechanisms.

A woman works in a tree nursery in Cameroon. Emily Pinna, CIFOR
A woman works in a tree nursery in Cameroon. Emily Pinna, CIFOR

Sixty percent of the African population is under the age 25. How is this youth demographic affecting your work?

P-J K: We think that if we help foster more local solutions [to climate change], it can help create more green jobs, which are needed for the youth of Africa. And so Green Invest and South Pole are working with the Green Climate Fund and GIZ to establish regional West African innovation centers to promote these innovations and support green small- and medium-sized enterprises (SMEs) to raise local solutions – not imported solutions, but local solutions.

MD: We realized that supporting green SMEs was very instrumental to catalyzing the path toward sustainability and fighting against climate change and deforestation. And so this became the story of Green Invest, which now focuses on two main pillars. The first one is climate strategies and metrics and the second one is supporting green finance – supporting the relevant stakeholders, SMEs and green financial inclusion.

What does the finance community in West Africa need most from the global finance community?

P-J K: Capacity. It’s hard to get accredited, and it takes time. Even for the best-prepared organizations, they have to go through a lengthy process for a minimum of 24 months, and they have to put together a lot of documentation. And if you’re not an accredited entity, then you cannot access green finance. We need to find a way to simplify those administrative barriers, and we need to train local institutions so that they are better capable of accessing these forms and mastering the accreditation processes.

MD: We also need adaptability – getting institutions to think outside of their box and finance unusual tactics and stakeholders. This is where we come in as intermediaries, facilitating the link between international resources and beneficiaries.

P-J K: There is renewed national interest in green investment though, especially at the national level. Before, nobody was interested in green finance. Four years ago, when we were approaching banks, they were not interested. They were telling us that climate change was an issue for industrialized countries, and here, they were just about making money. And now, it seems that they are thinking that they can make money through green finance. So that is the good news.


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