Climate Adaptation Notes

Climate Adaptation Notes is a proposed funding mechanism designed to mobilize private, commercial bank, and institutional investment for water and wastewater infrastructure in sub-Saharan Africa. The instrument combines short-term construction financing from commercial banks with long-term asset-based funding from institutional investors, utilizing 'first loss' subordinate debt from Development Finance Institutions (DFIs) to mitigate risk. The mechanism targets three tiers: the Southern African Common Monetary Union (or ZAR-tied countries), the Southern African Development Community (SADC), and the broader sub-Saharan Africa region. Success depends on the availability of deep local debt capital markets and a robust pipeline of investable projects. The instrument is currently in pre-piloting and fundraising stages.

• Climate Adaptation Notes is a structured funding mechanism designed to increase private, commercial bank debt, and institutional investment in water and wastewater sector infrastructure. It integrates short-term project financing for construction from commercial banks with long-term asset-based infrastructure funding from institutional investors.
• The instrument is currently in the pre-piloting and fundraising stages and has not yet been implemented. Current activities include consulting strategic partners, establishing a licensed independent fund manager, and seeking grant funding to create a debt capital markets platform.
• The mechanism identifies four primary stakeholders: project developers (public, private, or PPP), commercial banks for origination and due diligence, institutional investors for refinancing projects reaching commercial operations, and DFIs to provide 'first loss' subordinate debt to catalyze long-term investment.
• The Southern African Customs Union (including Botswana, Eswatini, Lesotho, Namibia, and South Africa) is identified as well-suited for the model due to the presence of deep institutional investor pools and developed debt capital markets. Specifically, 90% of African pension fund assets are concentrated in South Africa, Botswana, Namibia, and Nigeria.
• Two primary challenges to the success of the instrument are project pipeline risk, where long development cycles may limit the number of financeable projects, and the complexity of monitoring and measuring climate adaptation criteria for borrowers and lenders.

APA

Climate Policy Initiative (2021). Climate Adaptation Notes. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/climate-adaptation-notes-2/

Chicago

Climate Policy Initiative. Climate Adaptation Notes. 2021. https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/climate-adaptation-notes-2/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Climate Adaptation Notes |date=16 September 2021 |url=https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/climate-adaptation-notes-2/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2021climate, author = {{Climate Policy Initiative}}, title = {{Climate Adaptation Notes}}, institution = {Climate Policy Initiative}, year = {2021}, month = sep, url = {https://www.climatepolicyinitiative.org/gca-africa-adaptation-finance/case_studies/climate-adaptation-notes-2/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }