Firms urged to take lead in continent's climate finance

CBK Governor Kamau Thugge. [Boniface Okendo, Standard]

The private sector has been urged to help fill the huge financing that is needed to tackle climate change in Africa.

The calls came at the two-day Africa Climate Business Forum that started on Wednesday in Nairobi.

The forum, which was organised by the International Finance Corporation and the Central Bank of Kenya, brought together the private sector to discuss how to unlock private financing for climate change.

It comes in the wake of the Africa Climate Summit in early September in Nairobi.

Central Bank Governor Kamau Thugge while closing the forum on Thursday said there is a need to scale up climate financing, and the private sector should be part of this conversation.

"The transition to a green low carbon economy presents an opportunity not just for corporates but also for micro, small and medium enterprises (MSMEs), and am glad to see a cross-section of a mixture of participants in this forum," he said.

Dr Thugge said CBK is committed to the greening of the country's financial sector. The regulator in October 2021 issued guidelines to two commercial banks in climate risk management.

"The guidelines were meant to facilitate banks in incorporating climate risk-related considerations in their governance, strategy, risk management as well as disclosure frameworks and considerable progress has been made in implementing the guidelines but more needs to be done,'' he said.

The Governor said to consolidate guidance and enhance attractiveness as a refinancing hub, the country has embarked on a second phase of reforms.

Green finance

"We are developing a refinancing taxonomy that will identify activities, investments as well as projects that are considered green. This will be supported by a disclosure framework for banks that will be aligned to international standards, including the recently issued standards by the International Sustainability Standards Board," he said.

These reforms, he said, will spur transparency in green finance and thus attract domestic, regional as well and international investors to support Kenya's transition to a green low-carbon economy.

According to the International Monetary Fund (IMF), $190 billion (Sh28.5 trillion) is needed for mitigation annually by 2030 and $50 billion (Sh7.5 trillion) for adaptation by 2050.

"Estimates show that about three-quarters of climate investment needs must come from the private sector to complement public sector financing and private has therefore a central role to play," said IFC Regional Director for East Africa Mary Peschka in her opening remarks.

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