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Innovations in Private Sector Response to Climate Change in Africa

This article explores the role of the private sector in addressing Africa's climate change agenda and the development of the African carbon market. It discusses the lack of finance, knowledge, and baseline methodologies as key problems in the African carbon market and proposes problem-specific solutions. It highlights the unique design of the Africa Carbon Credit Exchange (ACCE) and its initiatives, such as facilitating access to finance, knowledge, and trading platform development. The article also introduces the Low Carbon Africa Fund, Green Knowledge Institute, and Mechanization Guarantee Fund as strategic approaches to unlock finance, promote knowledge sharing, and facilitate the mechanization of rural agriculture in Africa.

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Innovations in Private Sector Response to Climate Change in Africa

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  1. INNOVATIONS IN THE PRIVATE SECTOR RESPONSE TO CLIMATE CHANGE AND THE AFRICAN CARBON MARKET DEVELOPMENT Lloyd Chingambo Seventh African Development Forum Addis Ababa. Ethiopia October 15, 2010

  2. The Big Question • Private sector as viable partner in dealing Africa’s climate change agenda Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

  3. The Current Position • Africa has little or no access to finance • Private sector remains on the sidelines • Domestic financial sector does lending to climate change projects • Little or no support for climate change investments • Absence of legal framework to support and protect climate change investments • Little attempt to use what funds, as are available, to unlock more funds for climate change • No real attempts to create/generate funds for climate change • Little appreciation of the interlocking relationship between Climate Change and Development. Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

  4. Key Problems of the African Carbon Market • 1. LACK OF FINANCE • Lack of project finance opportunities stifle low carbon project development • 2. LACK OF KNOWLEDGE • Lack of awareness, knowledge and competencies to leverage global carbon market at all levels (governments, private sector, financial sector, project developers, etc). • 3. LACK OF BASELINE METHODOLOGIES • Much of Africa’s economic activities are agro-forestry based. Low Carbon Africa Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

  5. Crafting Problem Specific African Solutions Commercial Interest in Low-Carbon Projects Project and Carbon Finance Low-Carbon Project Development Carbon Credit Trading Awareness and Sensitization Enabling Policy Environment Access to Knowledge Access to Finance Trading Platform

  6. The Unique Design of ACCE Africa Carbon Credit Exchange “Unlocking Low Carbon Africa” Access to Finance Low Carbon Africa Fund Portfolio Access to Knowledge The Green Knowledge Institute Trading Platform A Transparent and Structured Marketplace PROJECT PIPELINE DEVELOPMENT

  7. Facilitate Access to Finance Lloyds (Fund Manager) Offshore Investors Co-Fund Manager Zambian Investors Mandate • Facilitate the development of innovative instruments and financing structures thereby unlocking finance to catalyze low carbon project growth in Africa. • Develop financing structures which would offer different risk profiles to unlock both the private sector and the domestic financial sector. • Facilitate financial access and market development for project promoters including the smallholder farmer • Facilitate appropriate green technology transfer to Africa. LOW CARBON AFRICA FUND GTCEF AMGF LCAF 1 WEF

  8. Green Technology Credit Enhancement Fund Green Technology Credit Enhancement Fund Stage 1. ACCE Undertakes Evaluation and Engineering of Primary Securities. Stage 2.a. With Better Presentation of Securities, Some Clients Go Straight to the Lender. ENHANCED SECURITIES INDIVIDUAL IMPORTER Banks LIQUID ASSETS Private Equity Funds TANGIBLE ASSETS Stage 2.b. Less Secure Clients will access components of the GTCEF Public Bodies Development Banks OFF-TAKER AGREEMENTS CREDIT ENHANCEMENT FUND EQUIPMENT Govt. ENHANCED SECURITIES POLITICAL RISK INSURANCE SYNDICATE OF IMPORTERS CASH GUARANTEE CARBON CREDITS International Funds LIABILITY INSURANCE PROPERTY INSURANCE TECHNOLOGY TRANSFER INCENTIVE FUND Stage 3. Provision of Climate Change Technology Transfer Funding TRADE INSURANCE Income: Investors Income: Donor Agencies Income: Money Market FINANCE TERMS

  9. The Mechanization Guarantee Fund • Strategic Aims of the Fund • Facilitate mechanization of rural agriculture • Facilitate improved production and yields for the rural Farmers • Mobilise and secure finance for purchasing equipment • Increase technical support to rural farmers • Facilitate the development of sustainable and lower carbon footprint rural agricultural practices. Africa Carbon Credit Exchange Telephone: +260-1-238473/2 www.africACCE.com

  10. Facilitating Access to Knowledge Green Knowledge Institute (GKI) • Strategic Aims of the Institute • Knowledge Hub for carbon market development in Africa • Information Sharing Hub for African Designated National Authorities (DNAs) • Facilitate the development of African appropriate carbon methodologies • Deal with issues of sensitization and capacity building issues (e.g., governments, public and private sectors, NGOs, and private sector • GKI is developing into a Bureau for connecting required technical expertise to develop carbon offset projects.

  11. The Trading Platform • A Transparent and Structured Marketplace • ACCE is building a regulated trading platform on which market players can buy and sell credible compliance and voluntary carbon credits generated in Africa • It provides a transparent price discovery mechanism is essential for African project developers to realize market value for carbon credits • Through a network of Brokers and local partners across Africa ACCE will provide a medium for transaction, clearing and supporting structures to facilitate climate change/carbon projects.

  12. Network of Brokers across Africa Network of Brokers • Scaling up to • Africa

  13. Partners

  14. Partners

  15. CONTACT DETAILS AFRICA CARBON CREDIT EXCHANGE 4th Floor, Godfrey House. Kabelenga Road. P.O. Box 390035 Lusaka. Zambia lchingambo@africacce.com skhan@africacce.com Website: www.africACCE.com Telephone: +260-1-238473/2

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