The New Financial Pact Summit, which took place June 22–23 in France, convened heads of state and government, Multilateral Development Banks (MDBs), international organizations and hundreds of civil society private sector and investment leaders.
Private-sector recommendations from the summit called for African collaborative pension fund and sovereign wealth fund investments at scale, made through the African Green Infrastructure Investment Bank (AfGIIB), to counter the MDBs’ private capital mobilization market failure in Africa.
Leaders met with the goal of transforming the world’s financial system through the curation of a new financial pact, which equitably redefines the mandates of MDBs to better deliver the mobilization of private climate capital at scale, green infrastructure and finance solutions related to debt for emerging markets and developing countries.
According to the G20, an intergovernmental forum involving 19 countries and the European Union that addresses major issues related to the global economy, MDBs need to mobilize $10 of private capital for every $1 of MDB finance provided. However, the G20 reports that the actual MDB private capital mobilization delivered is on average 20 cents to 38 cents of private capital mobilized for every $1 of MDB finance.
Africa’s green finance market is MDB-dominated, and it lacks a purely green institutional investment platform to mobilize private capital at scale. Africa needs to mobilize $3 trillion of private investment for its nationally determined contribution (NDC) investment projects by 2030; however, the world only mobilized $2.8 trillion from 2000 to 2020 — and only 2 percent of that went to Africa. Thus, Africa needs to urgently mobilize more institutional investment in the next seven years than the world mobilized in the past 20.
“Africa’s outsized human and super natural capital, green industrial cities initiative and unparalleled green mineral wealth endowment, critical for the world’s $10 trillion per annum and growing global green industrial economy and decarbonization, presents AfGIIB’s institutional investors with the global investment opportunity of our lifetime to establish African green and industrial infrastructure as a globally competitive investable asset class,” said Hubert Danso, CEO and chairman of Africa investor Group and a member of French president Emmanuel Macron’s private-sector taskforce. “As the largest consortium of African and global institutional investors representing over $20 trillion of assets under management and advisement, AfGIIB is committed to innovation by building and strengthening the African green infrastructure investment market instead of simply serving it, and making mobilizing private capital at scale for African NDCs the expectation, not the exception.”
To read more about the summit, click here.