G20 Compact with Africa Facility supports green business

Germany and the World Bank establish Facility to scale-up private sector investment in green business in Africa

Today, at the second high-level G20 Compact with Africa (CwA) conference hosted by German Chancellor Angela Merkel, Germany and the World Bank launched a new Facility to support private sector investment in green businesses and mobilize financing for climate change mitigation and adaptation activities in Africa. The Facility aims to unlock private sector investment that fosters climate activities of small and medium-sized enterprises in CwA countries. The Facility will work to create an enabling environment for investment through 1) Policy dialogue and creation of enabling environments; 2) Capacity development and technical assistance; 3) Design of blended finance instruments for the private sector.

Svenja Schulze, German Federal Minister for Environment, Nature Conservation and Nuclear Safety: “We see environment and climate aspects as central for the G20 Compact with Africa initiative and welcome the new facility. Private investments to develop climate friendly economies – like renewable energies, sustainable and resilient agriculture – could be cornerstones of sustainable development in our African partner countries. All investments should meet ambitious environmental and social standards. As a contribution to this, my ministry, together with the World Bank, will set up a new facility to mobilize climate finance for Small and Medium Enterprises (SMEs) in CwA countries.”

Laura Tuck, Vice-President for Sustainable Development, World Bank said: “Private sector participation is fundamental to tackle climate change and ensure sustainable development. There is huge potential in Africa to create climate-friendly jobs, including through SMEs, and this new facility will support the development of an enabling environment for sustainable solutions, including through local business.”

Germany will contribute a total of 20 million euros, half of which will be dedicated to strengthening local capacities in developing green business models and climate financing strategies. The financing component with an initial capital of 10 million euros will provide blended financial instruments to local SMEs investing in climate-related activities. Germany and the World Bank welcomed other countries and donors to join this multilateral initiative.

The German contribution through the International Climate Initiative is part of a wider effort of the BMU to strengthen its cooperation with African countries. Central to BMU’s approach is the acknowledgment that the exceptional natural capital of the continent plays a key role for global climate and biodiversity conservation as well as the conviction that low-carbon strategies can become a catalysator for the economic development of the continent.

About Compact with Africa (CwA) and the 2nd High-Level Conference

The G20 CwA initiative, established in 2017 under the German G20-presidency, aims at promoting private investment in reform-minded African countries. Twelve countries participate in the initiative: Benin, Burkina Faso, Guinea, Côte d’Ivoire, Ghana, Egypt, Ethiopia, Morocco, Rwanda, Senegal, Togo and Tunisia. The CwA-Initiative is governed through the G20 Africa Advisory Group (AAG), co-chaired by Germany and South Africa. The African Development Bank Group, the International Monetary Fund, and the WBG coordinate the initiative.

Following a first high-level CwA conference, which took place in October 2018 in Berlin, the German chancellor invited for a second time the CwA countries as well as international organisations and G20 partners to discuss the implementation of CwA-activities. Twelve African heads of state and government participated in the conference.