“Africa’s Green Economy Summit is the right marketplace for projects, sponsors and investors to meet, because the matching of the criteria is critical”

Exclusive interview with Olumide Damilola Onitekun, Lead Project and Research Analyst at Africa PPP Advisory Services. He was a key organising member for the pitch session at the recent Africa’s Green Economy Summit in Cape Town.

Let’s start with some background on you, and please tell us more about AP3.
I’m Olumide Onitekun. I work with Africa PPP Advisory (AP3 Advisory). I’ve been with AP3 Advisory for more than 2 years now. I work in the transaction advisory team. AP3 Advisory basically is an infrastructure finance PPP specialist. What brings distinction to AP3 is we bring world-class expertise and local knowledge to deliver value-driven infrastructure and finance consulting services across emerging economies with diverse clientele, government institutions, private and development financial institutions. So basically, at the high level, that’s AP3. And of course, over the past 10 years, we’ve been very catalytic in delivering successful infrastructure across Africa and of course emerging economies.

Can you share some of your success stories. How have these changed people’s lives or contributed to mitigating climate change?
During my time here at AP3, I’ve been involved in a couple of projects that have given us value and impacts. For example, Africa’s Green Economy Summit (AGES), which was held February. I was part of a team that put together, alongside with AGES, we put together over a billion dollar of projects. Basically what we do is to screen the projects to ascertain their viability from the investor’s point of view, to ascertain the projects’ climate and economic benefits. So, these are the high level criteria, and, of course, the impact of the projects. Then the project is assessed for funding, either at early stage or for downstream funding.

I’ve also been involved in a project in agriculture in Nigeria; the AfDB funded special agro-processing zones (SAPZ). We developed a feasibility study for one of the sub-nationals to position them for an access fund of the AFDB. And what this does is the ripple effect of bringing economic benefits to the public core, in particular, offering over 20,000 job opportunities to people. And, of course, the project offers quite interesting investment returns to investors. So yes, these are, at a very high level, some of the projects I’ve been involved in that have delivered value and impacts.

Tell us more about how important green project initiatives are in the green economy of the future on the continent?

Well, I would say that nature is for man, and that the environment is for man. So, when we prioritise the environment, we are basically prioritising ourselves, and we are prioritising the livelihood of man. Sadly, Africa contributes minimally to global emissions. However, Africa is more vulnerable to the climate change crisis.

So it is very important that Africa takes a leadership role to mitigate and adapt to climate change. Statistics from the African Development Bank suggest that Africa loses $7–15 billion annually to the frequency and severity of climate-related disasters. It’s important that through different innovations, we ensure that this prevailing crisis is mitigated. In addition, it’s quite saddening that if we don’t take the leadership role to address these critical problems, the statistics show that we stand at a critical junction of losing $50 billion annually to climate related disasters. Climate change-related and green project initiatives are providing more opportunities for Africa to tap into opportunities of creating livelihoods, sustainability of environment, and all that. Therefore, addressing climate change, green project initiatives are critical to the development and sustainability of Africa.

What are the main obstacles in your view?
The one main obstacle, from my point of view, is limited access to funding and finance. I believe the willpower is there, the commitment is there, we have seen different African nations making pledges to the Paris Agreement, so that suggests to us, yes, the political will is there. However, there’s limited access to funding. And of course, quite interesting, the funding is available, but the technical expertise required to access this fund is quite limited, in particular, there is limited access to upfront investment costs. For example, renewable energy technologies require upfront investments, and this is quite limited for the continent to access.

Of course, there’s a high level of perceived risk of the continent, a high level of insecurity around policy and political instability, exchange rates, inflation; all these bring a level of interest to accessing the pool of funding available, and of course, a lack of expertise, especially on developing bankable projects. Because, for an investor or a fund to commit to a project, the investor needs to be sure that the project makes commercial sense, that the project is commercially viable. And the expertise, the resources to get this done, is not there. Most projects do not have funding, and then it is difficult to bring forward detailed feasibility source studies that capture the commercial and economic viability of the project and the financial modelling, because investor needs to see this to ensure that the project is viable before they can commit their resources.

So, the main obstacles include lack of technical expertise, limited bankable projects, limited information on funding access to project owners, and high level of passive risk in Africa. These for me are the key obstacles that we must begin to mitigate. This is why a company like AP3 bridges this gap to ensure that the technical expertise is there to access these funds at the global level. The funds are there, the money is there, but there is no expertise to access the funds.

How can governments, businesses and NGOs collaborate better to support green initiatives?

Driving a sustainable and equitable transition requires a collaborative approach. It is not government alone, it is not private alone, it is not the non-governmental organisations alone. It requires a collaborative effort. And what I mean by a collaborative effort is one that understands the strengths of the private sector and the NGO. So, we need to come together to leverage our collaborative powers to drive a just and equitable transition. Take, for example, government in itself needs to provide the conducive environment in terms of policy and the regulatory framework to ensure that business is tracked to ensure that NGOs can play in this space. And of course, NGOs bring a unique expertise to this arena because they have more access to the communities who are heavily impacted by climate change; they bring this unique blend to bring all kinds of stakeholders, engagements and resources together to ensure that everybody’s voice and expertise are leveraged.

Of course, private sector brings the technical capabilities to ensure that we all come together and a just and equitable transition is achievable for the continent. Therefore, government needs to bring the regulatory and the policy environment, private needs to bring the technical expertise, and NGOs need to bring the awareness and the community engagement to ensure that the approach is bottom up, both from the grassroots to the entire policy environment.

What in your view are the most current investment opportunities in this sector that you are particularly excited about?
The most current investment opportunity in this space, particularly in green projects, climate mitigation, adaptation and cross-cutting etc., statisticians suggest that 60% of untapped resources in renewable energy are domiciled in Africa. That is massive. The resources are there. However, I think there’s this thing about the benefit of challenges. We’ve seen the era of COVID. There was the way business was done before COVID. Now, there’s been a re-imagining of how business is done post-COVID. What has compelled that level of innovation is the COVID crisis.

Now, the climate crisis is on the loop, and what that brings is a higher level of innovative power to ensure that we will begin to think of how we can maximise and tap into all these resources that have long been available on the continent. So for me, I think renewable energy offers a very impressive opportunity. We’re hosting 60% of the untapped resources around the globe.

Climate change also offers us an incredible opportunity, because Africa hosts an abundance of natural resources. So, climate change is bringing us to the realisation that, yes, it is time for us to begin to tap into our resources to leverage them for the benefit of our continent.

You were a key organising member for the pitch session at the recent Africa’s Green Economy Summit in Cape Town. How important is such an event for the continent in your view?

Yes, in partnership with the AGES team, I played a key role in screening projects to ensure the projects are climate smart and the projects profiled economic benefits. You know, one thing I think I should mention at this juncture is that the pool of funding available, that there are different criteria that are being set by fund providers that each project or initiative must meet. One of the things that I did was to ensure that we understand in detail the criteria because we have different funders. And we were looking at these projects to see, okay, how can we match this project to meet these criteria?

So, I played a key role in ensuring that we were able to identify key investors and key funders, the likes of the African Development Bank, the European Investment Bank, the Islamic Development Bank and Afreximbank. We would bring them into the pool. And of course, we have access to these projects, so how can we begin to match these project to ensure that they have access to funding? So, I played a key role to ensure that Africa’s Green Economy Summit is the right marketplace for projects, sponsors and investors to meet, because this matching is actually critical. The money is there, but the technical capacity to ensure that projects meet the criteria of this funding is really lacking and the event bridged this gap.

Anything you would like to add?
Yes, I think one thing that I would like to say is that Africa really needs to take the transitioning to a resilient and low carbon environment in a way that is more realistic to our development context. The pace at which developed nations transit may not necessarily reflect or match our developmental realities. Our transition must be gradual. Our transition must be, let me use the word, gentle. We have to ensure a just and equitable transition. And for us to do this, we must always ensure that our ambitions align with our developmental realities and with the population. And when I say population, I’m talking about human capability, human capital development, the reality of a nation, just to ensure that yes, a just and equitable transition is favourable.