FSD Africa is in talks with potential green-bond issuers across the continent to raise at least $400 million for climate-linked projects this year.
The agency backed by the UK’s Foreign, Commonwealth & Development Office will be a transaction adviser on the deals it expects to come from countries, including Tanzania, Zambia, Nigeria and Morocco. The amount to be raised will be about 70% higher than what FSD Africa said it helped to mobilize in climate- and gender-related financing in 2022.
“We do hope that in the next quarter we should get some issues coming to the market,” FSD Africa Capital Markets Director Evans Osano said in an interview.
Africa, which contributes about 4% of global greenhouse gas emissions but is among the hardest hit by climate change, gets very little of the hundreds of billions of dollars of the world’s climate finance. About $30 billion of such funding is raised in Africa annually, ten times below the $300 billion the region requires each year.
Additionally, only $4 billion or 13% of the $30 billion has come from private sources, partly because of an unfavorable perception of the risk of green projects on the continent, according to Mark Napier, FSD Africa’s chief executive officer. That compares with about 30% to 50% private financing of green projects in the other regions of the world.
“The share of climate finance that is coming from the private sector at the moment is really pitifully low,” Napier said during the interview. “There’s a long way for Africa to travel. We see that as an opportunity.”