By Jeff Kapembwa

The Green Climate Fund urges debt-ridden African countries to look to capital markets or alternatively use Public-Private Partnerships (PPPs) to insulate themselves from climate change and raise resources to invest in their fledgling economies.
Africa is estimated to lose an average of 2-5% of its GDP annually due to climate change impacts. Adaptation costs are projected at US$30-50 billion annually, representing 2-3% of the region’s Gross Domestic Product (GDP).
Experts note that with climate change accelerating and climate-linked disasters increasing, scaling down the economic gains of the affected countries around the world, many are racing to build resilient infrastructure.
Their efforts are however being frustrated by high debt portfolios owed to local and foreign creditors, crippling the countries from accessing enough funds, hence the need to look at optional funds.
With many countries, grappling with high indebtedness, experts feel, there is no need to despair, and instead they should look to capital markets and maximize various instruments, including bonds to attract a fraction of the financing unlike repeated borrowing.
Senior Climate Information and Early Warning Systems Specialist at the Green Climate Fund, Joseph Intsiful, recommended the green bonds and that sustainability-linked bonds are gaining traction as viable instruments to drive climate investment.
Speaking recently during a roundtable on the sidelines of the ECA’s COM2025, urged debt ridden Africa to look to capital markets or alternatively seek to work under the PPP model to secure some innovative funding instruments to access the required investments.
Ntsiful cites South Africa’s first sovereign green bond launched in 2023 as a case in point, arguing. “The government used $200 million in green bonds to finance renewable energy and climate-resilient projects,” he noted.
Similarly, Morocco’s green bond initiative has bolstered the Noor Ouarzazate solar complex, one of the largest in the world.
Beyond green bonds, public-private partnerships are playing a crucial role in mobilizing climate finance and risk-sharing.
“Public service sector partnerships are critical in terms of mobilising climate finance and enabling other parties, particularly the private sector, to participate in this very important resource mobilization,” Ntsiful explained.
Reflecting on the role of debt swaps, Jean-Paul Adam, Director for Policy, Monitoring and Advocacy in the Office of the Special Advisor on Africa to the United Nations Secretary General, cautioned that while they provide some relief, they are not a substitute for full debt restructuring in cases where countries are in financial distress.
However, debt swaps do hold promise for creating fiscal space, particularly in African nations struggling with high debt servicing costs.
“The opportunity to improve your fiscal space is key because the cost of servicing debt, particularly in African countries, whether they are middle-income or low-income, has dramatically increased in recent years. And this is linked to the problem of the cost of capital,” he said.
Adam stressed that for debt swaps to be truly effective, they must benefit vulnerable communities rather than serving narrow interests. There are encouragements for Africa to maximize PPPs to undertake infrastructure development.
According to expert assessments, the model has helped develop infrastructure by leveraging private sector capital and expertise to complement limited public resources, potentially leading to more efficient, high-quality, and cost-effective infrastructure projects.
Green bonds are debt instruments, similar to regular bonds, where the proceeds are specifically used to finance projects with positive environmental impacts, such as renewable energy, energy efficiency, and pollution reduction.
Capital markets are financial markets that bring buyers and sellers together to trade stocks, bonds, currencies and other financial assets. Capital markets include the stock market and the bond market. They help people with ideas become entrepreneurs and help small businesses grow into big companies.
PPPs, what in for Africa
• PPP model, experts say, has helped in redressing Infrastructure Gaps:
Africa faces significant infrastructure deficits, and PPPs aim to address these gaps by tapping into private sector finance and expertise.
• Leveraging Private Sector Resources:
PPPs allow governments to access private capital and expertise, which can be crucial for financing and executing infrastructure projects.
• Improved Project Preparation and Management:
PPPs can lead to better project planning, preparation, and management, potentially resulting in faster and more efficient project delivery.
• Enhanced Operational Efficiency:
The private sector’s focus on operational efficiency can lead to better maintenance and management of infrastructure assets, ensuring long-term sustainability and value.
• Examples of PPP Success:
The HKB bridge project is an example of a successful PPP in Africa, demonstrating the benefits of strong commitment from all partners, inclusive project design, and political risk insurance.
• Challenges and Considerations:
While PPPs offer potential benefits, there are also challenges to consider, such as the need for robust regulatory frameworks, transparent procurement processes, and effective risk management.
• PIDA’s Role:
PIDA (Programme for Infrastructure Development in Africa) plays a key role in facilitating infrastructure development in Africa, including through PPPs, to support regional connectivity, reduce trade costs, and boost intra-African trade.
• Financing the Infrastructure Gap:
The infrastructure demand in Africa is substantial, with a financing gap estimated at between $67.6 and $107.5 billion annually. PPPs can help bridge this financing gap and accelerate infrastructure development.