“Although in its infant stages, carbon finance is one of the main sources of finance for the future”

Exclusive interview with Jonathan First, MD of Delphos International and member of the advisory board for Africa’s Green Economy Summit that is returning to Cape Town in early 2024. 

Let’s start with some background on you. You have extensive experience in green financing.

Good morning, good afternoon. My name is Jonathan First, I’m managing director of Delphos International. My background is very much dominated by what I call climate finance and impact investing, something that I’ve been involved in for the past almost seven years. I first started to recognise the importance of it when I was at the Development Bank of Southern Africa (DBSA). I was very fortunate to be able to use my understanding and my background in impact investing and climate finance to lead the development of the DBSA’s Green Bank, which was effectively a climate finance facility, which was co-funded by the DBSA Green Climate Fund and EIB (European Investment Bank). 

Since then, I’ve continued to focus on impact investing and climate finance, primarily through my involvement with Climate Policy Initiative, which runs something called the Global Innovation Lab for Climate Finance. I’m also chair of the Green Outcomes Fund, which is Africa’s first outcomes-based fund, and I was involved in setting up the Impact Investing Advisory Board for South Africa and was a board member. 

You are part of the team at Delphos now, they specialise in development finance and advisory services. What do you focus on for the firm?

So, I joined Delphos fulltime towards the end of last year. My particular focus is on raising capital. Delphos International has two arms to it: financial advisory and capital raising, I focus much more on the capital raising side, given my background in investment banking and development finance. My particular focus is on South Africa, Southern Africa and Sub-Saharan Africa. I have been involved in capital raising in other global areas, such as Central Asia, but my primary focus is Africa. The focus of the firm is, however, the global emerging markets, as I said, focused on transaction advisory and on capital raising. 

Any specific projects that you are working on that you are particularly excited about? How will this change people’s lives?

We have secured a number of mandates. The firm itself (there are 120 people) has a wide range of mandates that it has secured in many of the global emerging markets. As far as our specific focus is concerned, that is, once again, Sub-Saharan Africa. We have a number of mandates that have been very exciting. 

The biggest focus or the biggest opportunity at the moment is around renewable energy. We’re currently working on a catalytic empowerment fund, which we believe will go a long way to securing funding, or catalysing, should I say, funding for private sector, what I call, utility-scale, renewable energy projects.In addition to that, we’re working on specific mandates around renewable energy.  

We’re also busy engaging with a company around the treatment of water, which clearly is an enormous challenge in South Africa. And then there are a number of potential opportunities in the green hydrogen space. 

All of which, of course, make a significant difference not only to preventing climate change, but job creation. In other words, all the criteria that we refer to as ESG impact.

What are the main challenges in your view?

To me that the biggest challenge is what I call politics, government and regulation. I think that it is becoming extremely difficult, particularly for the private sector to develop projects to fund projects with the current regulatory environment. I mean, clearly, this does differ from country to country. But, in my view, my personal view, governments are not helping the process. You know, this is a complicated topic; it’s obviously one which we can discuss for many hours. But I think that government reform, government support is vitally important. I mean, I think we have to accept that governments do not have funding, or the availability of funding, particularly in the developing world, and particularly in Africa. But I think that if they could support private sector, private sector funding, and private sector initiatives through political support, regulatory reform, I think that will greatly assist the development of impact-related infrastructure. 

What keeps you excited about this sector?

I suppose, you know, excitement is maybe not the right word. I think it’s more necessity. I think that climate and preventing climate change is clearly at the top of everyone’s agenda. And the reason why I think that this leads to this excitement as we as we can refer to it, is that a lot of money, a lot of funding is now making being made available to support the prevention of climate change. And I think also in terms of just preventing climate change through the infrastructure projects, through the businesses that are developed, clearly there are other benefits. These are so-called social benefits, such as job creation, jobs for women and development of local communities. So, I think it’s the fact that we need to change, and we need to recognise that climate is extremely important in the future, not only of Africa, but obviously the planet. And I think that funders understand this. And I think to develop the ability to catalyse funding leads to the benefits that I previously spoke about, namely preventing climate change, job creation, and community development.

Which African countries are doing the right things in your opinion?

The three countries in my mind that are perhaps ahead of the others include Rwanda. Rwanda clearly has a climate agenda. It has probably the most developed climate agenda, climate commitment, on the continent. Certainly, when you visit Rwanda, you can feel the difference, you can feel this change, you can feel the commitment to, for example, meeting climate targets within the country. 

The other country, of course, is Kenya. Kenya has a vast population, almost similar to South Africa, and it clearly doesn’t have the economic wealth of South Africa. But I just feel that the country is trying to change, that the government is trying to support change, and in particular, around climate. Given the resources relative to South Africa, for example, in my mind, they’re doing a better job.  

And then the last country is Namibia. And in particular, around green hydrogen, I think they’ve stolen a march on the continent, I think they started in a march on South Africa. And clearly, once again, the government institutions within the government have recognised the importance of green hydrogen, have recognised the country as a launching pad for green hydrogen. So those are really the three countries that you know, I believe, are making a lot of progress. I don’t know West Africa particularly well, nor do I have much knowledge on North Africa. But clearly, as I said, those three countries seem to be stealing a march on the others. 

You were a member of the advisory board for the inaugural Africa’s Green Economy Summit in February 2023. What were your impressions?

 I think the inaugural the inaugural conference was successful. I think one of the reasons it was successful is that it very much tied in with the Formula E that was held in Cape Town at the same time. And I think well done to the organisers for recognising that, because I think it was a very good springboard to the conference to the success of a conference. 

I think the other thing that was important is it was a fairly small conference. And as a result of which I think the interaction between delegates was better. I think certainly people left the conference with a positive view, given that there are any number of conferences that are held in Cape Town and held on the continent during the course of the year. So, I definitely think it created a buzz, created interest. And I think there were certainly most of the delegates, as I can say, would be very keen and look forward to the next conference.

Carbon finance will be featured in next year’s programme. How important is that in your view?

Carbon finance, carbon credits, voluntary carbon markets, have become probably one of the hot topics at the moment, because what is recognised is that it represents a source of funding, a real source of funding, which can make projects happen. 

So that’s on the positive side. I think carbon finance is here to stay. I think the issue or the challenge is that it’s very much in its infant stages. And I think there’s a far greater expectation at this stage than the reality of securing carbon finance. So I think we need to manage expectations, I think we need to understand the markets a lot better. But I also think, very importantly, we have to contextualise markets within a national or regional context. I think that’s the big challenge. But as I said, I certainly think it’s one of the main sources of finance for the future.

What will be your message at the upcoming event?

For the upcoming event, I think the importance of it is to create an atmosphere, to create a platform, to create a meeting place for people to engage. And I think engage in a number of ways. First of all to bring funders together, but funders across the funding spectrum, but I also think it also needs to bring together people who need funding. I think it also has to do it within the context of Africa, and of course, the challenges and the advantages of funding projects in Africa.  

I always think the most successful conferences are, first of all, those that introduce new themes, new concepts, or to go into a lot more detail on current themes and current concepts, such as, for example, carbon finance. But more importantly, for people to engage, for people to make contacts. I always believe that a conference is not where necessarily you do the deal but what it allows you to do is to get the introduction, and then to hopefully a follow-up meeting when the real business is done.  

So, yes, I definitely think it should become a feature of not only being held in Cape Town but on what it tries to achieve.  

Anything you would like to add?

I think in closing, I think that the summit is going to remain relevant as long as it continues to choose topics to discuss that are relevant, and which get people to think and engage. You know, you’re only as good as your last conference, your last summit, but certainly based on the last one, should I say the first one, certainly there is an expectation that the second one should be just as good, if not better. The organisers, and I am part of the advisory committee that is supporting the organisers, I think that we’re developing topics to discuss, which I think will keep interest in the summit and keep the interest of the people attending the summit.