Mobilising private-sector investment to mitigate climate change in Africa

The document examines how private-sector investment can be mobilised for climate mitigation in Sub-Saharan Africa, focusing on the Clean Development Mechanism (CDM), Climate Investment Funds (CIF), the Green Climate Fund (GCF), and South Africa's REIPPPP. It argues that while market mechanisms like the CDM have successfully engaged the private sector, further tailoring of rules to African circumstances and stronger synergies between multilateral and national finance are necessary to meet Nationally Determined Contribution (NDC) goals.

• The Clean Development Mechanism (CDM) has been a primary tool for private-sector engagement in Africa, particularly through 'Programmes of Activities' (PoA) which reduce transaction costs for small-scale projects. In Sub-Saharan Africa, 105 single projects and 265 component project activities in energy supply, energy use, and land use have triggered at least USD 8 billion in cumulative investments.
• South Africa's Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) demonstrates the effectiveness of competitive auctioning over feed-in-tariffs to lower renewable energy costs. As of March 2017, the programme had procured 6,376 MW of capacity across 102 projects, representing USD 20.5 billion in investment.
• The Green Climate Fund (GCF) has struggled to foster large-scale sectoral transformation in Sub-Saharan Africa due to complex accreditation procedures and a lack of direct access for national organisations. To date, the three approved mitigation projects in the region have all been led by international private-sector actors.
• The Climate Investment Funds (CIF) operate on a model where private actors are consulted but cannot initiate mitigation actions independently, unlike the CDM. Approximately 30% (USD 2.7 billion) of CIF funds are earmarked for private-sector projects, with USD 1.01 billion approved across 10 Sub-Saharan African countries, primarily focusing on South Africa, Ethiopia, Kenya, and Mali.
• There is a critical need for better integration between international and national finance mechanisms to provide investment certainty. In South Africa, 19 projects shifted from the CDM to the national Renewables Programme due to low carbon credit revenues, yet the national programme's policy against 'double dipping' prevents these projects from receiving both types of support.
• Public-sector led initiatives generally result in lower financial volumes than those that allow the private sector more decision-making autonomy. The document suggests that competitive approaches, such as auctions for power or emission reductions, are more effective at raising capital and reducing mitigation costs.

APA

Hoch, S., Friedmann, V., & Michaelowa, A. (2018). Mobilising private-sector investment to mitigate climate change in Africa. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2018/05/private-finance-for-sub-saharan-africa-1.pdf

Chicago

Hoch, Stephan, Valentin Friedmann, and Axel Michaelowa. Mobilising private-sector investment to mitigate climate change in Africa. Stockholm Environment Institute, 2018. https://www.sei.org/wp-content/uploads/2018/05/private-finance-for-sub-saharan-africa-1.pdf.

Wikipedia

{{cite report |last1=Hoch |first1=Stephan |last2=Friedmann |first2=Valentin |last3=Michaelowa |first3=Axel |title=Mobilising private-sector investment to mitigate climate change in Africa |publisher=Stockholm Environment Institute |date=April 2018 |url=https://www.sei.org/wp-content/uploads/2018/05/private-finance-for-sub-saharan-africa-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hoch2018mobilising, author = {Hoch, Stephan and Friedmann, Valentin and Michaelowa, Axel}, title = {{Mobilising private-sector investment to mitigate climate change in Africa}}, institution = {Stockholm Environment Institute}, year = {2018}, month = apr, url = {https://www.sei.org/wp-content/uploads/2018/05/private-finance-for-sub-saharan-africa-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }