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The paper examines how chronic fiscal imbalances and external shocks have increased public debt in five African nations, arguing that deepening domestic financial markets and ending financial repression are essential for long-term debt sustainability despite short-term fiscal tensions.

In 2019/20, Ethiopia's tracked climate finance averaged USD 1.7 billion per year, representing only 7% of its estimated annual needs of USD 25.3 billion. The landscape is heavily dominated by international public finance (92%), with a strong preference for grants (70%) and a focus on adaptation (56%) over mitigation (38%). While the Agriculture, Forestry and Other Land Use (AFOLU) sector received the most sectoral finance (29%), it remains underfunded relative to its 83% contribution to national GHG emissions. Significant barriers to private investment include a highly regulated financial sector, lack of a stock market, and unfavorable collateral policies for SMEs and small-holder farmers.

This report provides an overview of the insurance sector in Ethiopia, detailing the impact of 1990s liberalisation, the current state of market penetration, and the barriers hindering insurance innovation and retail reach.

The Rabobank Acorn Agroforestry Carbon Programme supports smallholder farmers in Zambia, Nigeria, and Kenya in transitioning to sustainable agricultural production through a technology-enabled carbon sequestration marketplace. By utilizing Payment for Ecological Services (PES) via carbon credits, the program aims to monetize natural capital, increase food security, and create green jobs. The pilot phase is currently underway, with carbon loans already disbursed and technical training provided to farmers. The first carbon credits trading cycle is expected to take place in three years.

The Africa Private Equity and Debt Programme (2020-2025) focuses on developing private capital markets across Africa to complement public markets. It seeks to increase the participation of local institutional investors, particularly pension funds, through regulatory reform, capacity building, and the creation of demonstration transactions. Key achievements include supporting Kenya's policy framework for private equity and venture capital, launching the AVCA Training Academy, and conducting market studies on private debt and pension fund investments in Southern Africa.

The Climate Finance Training Programme, running from November 2020 to March 2025, aims to establish a twinning arrangement between UK and African academic institutions to enhance climate finance capacity in Sub-Saharan Africa. The programme seeks to increase investments in climate-resilient projects and create a regional centre of excellence in green finance. As of October 2022, two cohorts of 22 participants each had completed the Africa Climate Finance Leadership Programme, with a third cohort scheduled for the final quarter of 2022.

The project aims to implement a CSD system in Ethiopia, starting with government securities and potentially expanding to corporate debt, equities, and funds. The system is intended to improve transaction efficiency, reduce costs, and attract diverse investors to support infrastructure and economic growth.

The document describes a project aimed at establishing a regulatory framework for capital market intermediaries and self-regulatory organisations in Ethiopia to enhance investor confidence and economic growth.

FSD Africa is supporting the creation of the Kenya Credit Enhancement Facility (KCEF), a non-bank financial institution designed to provide 100% irrevocable and unconditional credit guarantees for infrastructure-related corporate debt in Kenya. The facility aims to reduce risk for institutional investors, thereby increasing the availability of long-term capital for sustainable infrastructure and expanding the domestic fixed-income market.

The Kenya Green Bond Programme (2017-2021) focused on developing the green bond market in Kenya through policy reform, capacity building, and the creation of supportive regulatory frameworks. Key outcomes include the development of NSE Green Bond Listing Rules, the passage of tax incentives by parliament, and the mobilization of GBP 64.95 million in private finance for climate purposes, including Kenya's first green bond. The programme also trained over 20,000 bank employees via e-learning and provided training to 16 Kenyan verifiers.

The project aimed to advance long-term finance (LTF) in Sub-Saharan Africa by creating an LTF scoreboard and website to close information gaps for investors and policymakers. Key outputs included the finalisation of the scoreboard, hosted by the African Development Bank, and the completion of LTF landscape diagnostics for Côte d'Ivoire and Ghana.

The MEFMI Debt Management Programme (February 2021 - September 2022) provided technical assistance and capacity building to several African nations to improve debt sustainability, transparency, and strategic management. Key achievements include conducting debt sustainability analyses in Eswatini and Tanzania, developing a debt statistical bulletin in Botswana, consolidating debt databases in Zambia, and formulating Medium-Term Debt Management Strategies in Tanzania and Zimbabwe.

The document describes an ongoing scoping study in Morocco aimed at addressing the green finance gap. The project focuses on identifying financial instruments and structures to support green SMEs and projects, with a feasibility analysis currently in progress to inform the development of a new financing instrument.

The Nigeria Green Bond Programme, running from January 2018 to March 2023, focused on developing Nigeria's green bond market through guidelines, verifier training, and investment pipelines. Key achievements include the issuance of ₦32.83 billion in corporate green bonds and ₦25.69 billion in sovereign green bonds, with support provided to five issuers and 928 capital markets beneficiaries.

The project aims to establish the EABX OTC Exchange in Kenya, serving as both a trading platform and a market regulator to improve liquidity, transparency, and efficiency in bond, money, foreign exchange, and derivative markets. Key objectives include reducing funding costs for debt capital market issuances by supporting a credible benchmark yield curve and enhancing investor confidence in public debt. As of October 2022, the EABX CEO was onboarded, and recruitment for other key executive roles is ongoing.

The SADC Green Bonds Programme, running from April 2021 to March 2024, seeks to accelerate the use of green bonds for climate finance in SADC member countries. Key achievements include the launch of the SADC Green and Sustainable Bond guidelines in April 2022, the revision of the Dar es Salaam Stock Exchange rules in Tanzania, and the issuance of a MUR 500 million green bond by Cim Financial Services Limited in Mauritius.

The SEC Nigeria Digital Transformation Programme (August 2020 – March 2025) aims to modernise the ICT infrastructure of the Nigeria Securities and Exchange Commission to improve regulatory efficiency, agility, and transparency. Key goals include implementing digital regulatory services, enhancing information security, and streamlining processes through tools like e-prospectuses and e-filing. The programme is supported by a developing Digital Transformation Strategy and funding commitments from various partners for the deployment of digital infrastructure and software.

FSD Africa is collaborating with UMOA-Titres to implement an Electronic Trading Platform (ETP) for the WAEMU region to enhance the secondary trading market for debt securities. The initiative aims to increase market liquidity, reduce capital costs for governments and the private sector, and broaden the investor base beyond banks. As of October 2022, a Programme Manager was onboarded in March 2022 and the development of a draft Business Requirement Document (BRD) is underway.

FSD Africa partnered with the Cambridge Centre for Alternative Finance (CCAF) to contextualise the Cambridge Fintech and Regulatory Innovation (CFTRI) global executive online programme for Africa. Launched in February 2022, the initiative provided scholarships that enabled 30 participants in the first cohort to complete the course. The programme is designed to help financial regulators, supervisors, and policymakers understand fintech technologies, evaluate business models and their regulatory implications, and assess regulatory innovation initiatives.

CaVEx is a digital marketplace using distributed ledger technology to allow small-scale climate projects to collect data, convert it into carbon credits, and sell them to buyers via mobile payments. Developed by 4R Digital with funding from FSD Africa, the platform aims to lower barriers for projects that lack the resources for traditional expert evaluation. Current development includes testing use cases in Kenya and Senegal, with a minimum viable product planned for September 2022 and long-term goals of onboarding over 50 projects and accessing over $100m in climate finance.