43 allocated to public sector recipients or borrowers, and $1,197 million to private sector recipients or borrowers. The opportunity for the African Development Bank to be even more strategic with its portfolio lies in its sectoral allocations, which — moving forward — must help the Bank reflect Paris alignment, in line with the MDBs’ joint framework for alignment with the Paris Agreement. In 2019, the three sectors that received the greatest share of the Bank’s climate finance approvals were, in decreasing order of magnitude, energy, and power (approximately $1,200 million), agriculture (approximately $850 million), and transport (approximately $550 million). These may well remain dominant recipients, but the nature of climate finance investments in these sectors must demonstrate the heightened rigour that all MDBs are committed to in terms of defining what qualifies as climate change mitigation and climate change adaptation investments. A clear pipeline opportunity lies in Africa propelling itself towards advanced technology and innovation, through both home-grown entrepreneurship (green innovation in more advanced African countries that could be relevant and replicable in others) and technology transfer from overseas. Despite Africa’s climate change vulnerability and its negligible contribution to historical emissions, nations in Africa have made significant efforts to undertake meaningful climate action. This calls for greater reciprocity and support from advanced economies, including through support to Africa on climate change-linked technologies and innovation. To generate a more robust pipeline of bankable climate change and green growth investments, the Bank will: a. Expand project origination and preparation support through existing facilities such as the New Partnership for Africa’s Development (NEPAD)’s Infrastructure Project Preparation Facility (IPPF), Africa50 Fund, Africa Water Facility (AWF), the ACCF, the Africa Climate Resilience Investment Facility (AFRI-RES), and others particularly suited to climate change adaptation (for investments focused on resilience), climate change mitigation (for investments focused on low-carbon development and emissions reduction), or green growth investments (for biodiversity, ecosystems, land use, forestry, and natural resources management). b. Provide technical and financial support to African countries (national governments) and regional economic communities to develop further regional climate change adaptation, climate change mitigation, and green growth project preparation facilities and funding mechanisms. c. Act as a hub of expertise on quality investment preparation to African countries and project developers to provide insights into strengthening bankability and financial innovation. d. Pursue the application of internal carbon pricing, and notably of a shadow carbon price, as a way to assess the opportunities that a low carbon transition provides and reduce the risks that any investment might otherwise create; and support the development of a pipeline of low-carbon options consistent with the Paris Agreement as well as global and national emission reduction goals. Ensure that any carbon pricing methodology and rollout is appropriate within the African context. e. For green growth in particular, a prerequisite for the generation of an investment pipeline is for the African Development Bank to update its Green Growth Framework with a clear and precise definition of green growth, including its relation to a circular and blue economy, with specifics on what the definition entails in relation to the Bank’s scope of activities and investments, and communicate the definition Bank-wide. f. Develop, based on the definition adopted, an inventory or database of green growth initiatives, with clear criteria of what constitutes green growth. This will be used initially to guide project origination and preparation, as well as to track approvals, and thereafter to track the achievement of targets. The starting point for such a database will be the project inventory developed by an independent team that conducted an evaluation in 2021 of the Bank’s climate change and green growth performance. g. Increase volume and value of climate change and green growth investments in fragile situations, with explicit attention to investment components that create and sustain green jobs for local communities. h. Strengthen the interlinkage between green growth and social and environmental safeguards, and their use to enhance overall socioeconomic resilience of governments, communities, and business models. i. Make climate change and green growth mainstreaming for Paris alignment a mandatory process for project appraisal, before approval, similar to an environmental and social safeguard disclosure requirement. j. Develop eligibility criteria for biodiversity and land degradation neutrality projects as part of the climate change and green growth portfolio. k. Ensure that active consideration is given to investments that take into account indigenous knowledge systems and practices in climate change resilience (including but not limited to climate monitoring). Climate change —core to the African Development Bank’s strategy
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