Mobilizing Finance to Reach Net Zero in Developing Countries

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Scaling tangible solutions on-the-ground in developing countries is a pathway to tapping into the billions and trillions needed to finance a net zero future. "The scale of ambition needs to be met by very practical approaches by the public sector and also the private sector," said Emmanuel Nyirinkindi, Vice President of the International Finance Corporation (IFC) as he delivered the keynote speech at P4G’s COP26 event held on November 9 at the We Mean Business Coalition Pavilion.

Nyirinkindi shared IFC’s priorities of decarbonizing five sectors – energy, cities, agriculture, transport and manufacturing. He spoke about its target of spending 35% of financing on climate over the next five years and the importance of creating bankable projects and investing in early technologies that can help decarbonization.

Ana Hadjuka, Founder & CEO of P4G Partnership Africa GreenCo, picked up Nyirinkindi’s call for the right projects and shared how GreenCo provides exactly that – an actionable operationalized new business model that is mitigating investment risk in Zambia and Southern Africa. As a creditworthy buyer and trader of electricity in Southern Africa, GreenCo is the kind of business model that is reimagining the energy sector landscape in Southern Africa.

Allan Chivunda, Energy Officer at the Ministry of Energy in Zambia built on Hadjuka’s remarks by sharing some of the challenges Zambia’s energy sector was facing. The level of investment in renewable energy has been low in the country because of the high costs of capital and the high risk of the national utility companies. Through its model, GreenCo can de-risk utilities and directly contribute to Zambia’s aspiration of opening its power market and moving away from a single buyer model.

Driving home the need for on-the-ground innovative solutions, Lisa Ashford, CEO of Ethex and P4G Partnership Energise Africa, shared the untapped opportunity presented by crowdfunding. Energise Africa is a platform that is financing solar businesses in sub-Saharan with investments from individual investors who are using “the power in the pocket.” She spoke about the scalability of the business model across different sectors such as through P4G partnership PlusPlus, another impact investing platform but for agribusinesses. Ashford also made the key point that the benefits of these platforms go beyond energy and percolate to health, water access and financial inclusion.

Highlighting the private sector perspective was Nicholas Nesbitt, Chairman of Kenya’s Capital Markets Authority. He spoke about the importance of raising awareness within the private sector about what it takes to create a green business. He also underscored the need for strong framework to ensure that businesses’ claims of complying with sustainable standards are verifiable and accurate. Nesbitt shared homegrown solutions arising out of Kenya such as a successful green bond for funding student housing and agribusinesses. He also tipped his hat to P4G’s work in areas such as micro-e-mobility in Kenya where there’s now a buzz of people trying to get businesses going. As Nesbitt said, P4G is helping open doors to “open some eyes and open some wallets.”

Shinta Kamdani, CEO Sintesa Group added another private sector voice to the discussion and zeroed in on the opportunity available in Indonesia. She spoke of the rising trend of sustainable financing and green investments and how the government has identified a potential $250 billion in value creation by investing in areas like biomass energy generation, electric vehicles and batteries. She noted that the energy transition is a priority and challenge area for Indonesia, which is why government and financial institutions must collaborate closely to achieve Indonesia’s ambitious renewable energy goals.

Capital flow to developing countries is essential but it’s also important to distinguish between countries so more money can be mobilized to those with the most need, said Torben Huss, CEO of the International Fund for Developing Countries. From de-risking investments to institutions providing guarantees, Huss shared several ways for assisting countries to develop their infrastructure.

Marco Serena, Head of Sustainable Development Impact at the Private Infrastructure Development Group (PIDG) echoed Huss’ suggestion of guarantees for strengthening infrastructure in developing countries. He shared how PIDG is in the process of offering a guarantee to issue its first green bond in Vietnam and how it made its first investment in electric vehicles last year. Serena mentioned that PIDG has a lot of the tools to move the needle in emerging markets, but it would need to work with partners like P4G to strengthen and scale these solutions.

Rebecca Fisher, Associate Director at the ClimateWorks Foundation spoke specifically about the challenges in the electrification of transport. She highlighted how more money is flowing into renewable energy and energy efficiency and why that must expand to transport. As she pointed out, electrification of transport is a viable business model. “It’s not just a technology for the wealthy countries of the world, it’s for everyone.”

Katherine Stodulka, Director of the Blended Finance Taskforce at SYSTEMIQ urged everyone to pay attention to not just the financial commitment but also where the finance is going. She shared the need for a financial system transformation, as well as an economic one. Much like Nyirinkindi at the beginning of the session, Stodulka brought it back to the basics and how first projects at the millions must accelerate to get to the billion- and trillion-dollar agenda.

In her powerful closing, Stodulka aptly said, “This is a people agenda,” and “we don’t get the planet stuff right without the people.”

P4G Global Director Ian de Cruz moderated the event. Watch the entire session here.