Development Bank of Southern Africa CIO Greg Fyfe emphasises Africa’s pivotal role in global carbon markets. The DBSA invests in infrastructure and climate projects, catalysing private sector capital across Southern Africa. Key achievements include the African Carbon Markets Initiative, African Union endorsement of the Gold Standard and a pipeline of renewable energy and land-use projects delivering climate and developmental benefits. Challenges remain in scaling projects to bankable stage and ensuring integrity through robust verification systems.
Fyfe highlights Africa’s abundant natural resources, renewable energy potential, and investor appetite, but stresses the need for strong institutions, innovative financing and programmatic climate finance. At the Carbon Markets Africa Summit in Rwanda, DBSA will promote carbon markets as strategic development finance tools to crowd in private capital, bridge infrastructure gaps and deepen partnerships across governments, DFIs and project developers.
Good day all. My name is Greg Fyfe. I’m the Chief Investment Officer of the Development Bank of Southern Africa. As the CIO I look after the investments division and as the name would imply, we look to deploy our own capital as well as third party financing into infrastructure, very broadly defined, including water, electricity, transportation infrastructure as well as in climate. We really like to catalyse the money that we put in, and look at deploying and mobilising capital from other sources. From a geographic remit perspective, we focus on Southern Africa. So it’s certainly not just South Africa. We like to see our role as catalysing, in particular, the private sector funding into infrastructure that’s broadly going to have an appropriate developmental and social return.
Tell us about the carbon market projects on the continent you are involved in?
We’re doing quite a lot across the continent. One of the encouraging success stories is the growing momentum that we have behind the African Carbon Markets Initiative, which is increasing collaboration across governments, across development finance institutions, regulators, investors and project developers. And it’s really to create a stronger and more credible carbon market ecosystem across the continent.
Another notable success story for us is the African Union support for high-intensity carbon markets through the adoption and promotion of the Gold Standard for the Global Goals as a benchmark for carbon projects. So that is something else that we’re particularly proud about.
The third thing is the growing pipeline of projects that we are seeing, specifically land use projects that have got both the climate and developmental benefit. This would encompass creating jobs, improving livelihoods, enhancing ecosystem resilience, supporting biodiversity and a bunch of other benefits, including development of local economies.
We think Africa is extremely well positioned to take full advantage of the burgeoning opportunity which carbon markets presents. The continent itself is endowed with abundant natural resources, significant renewable energy potential, growing investor appetite, and a strong developmental imperative. It aligns nicely with carbon markets as well as the broader infrastructure investment opportunity. So we think that Africa is an important player in the global carbon markets and has a voice. We are really pleased with the opportunity to sponsor this event as well as the fact that this event is being held on African soil.
There are a number of success stories. mean, I think there three that immediately spring to mind. The first one, is the encouraging momentum that is being built and is behind the African Carbon Markets Initiative. We’re seeing increased collaboration amongst government, developed finance institutions, regulators, investors and product developers to develop a stronger and more credible carbon market ecosystem. It’s not only an important tool for carbon emission reduction, but also for sustainable development and broader sustainable economic growth. So the momentum behind that initiative is really encouraging to see.
Secondly, the African Union support for the adoption and promotion of the Gold Standard as a benchmark for quality carbon projects and carbon credits is really a fantastic step in the right direction. It promotes consistency, transparency and integrity, which is really critical in any market. And over the long term, it should have significant benefit for local communities.
Thirdly and also importantly, from a pipeline point of view, we are seeing the development of a robust pipeline of investable projects, whether they be in renewable energy, nature-based solutions, land restoration transactions, sustainable use projects and the like that are delivering both climate but also developmental benefits. Projects are going to be the proof of the pudding. So we’re excited to see those projects come through.
Yes, there are a number of challenges and obstacles. I think one of which is we need to see scale and velocity coming through in getting a number of projects to investment stage. So we do need to see a stronger and more robust pipeline of projects coming through. I think one of the things that can be done and certainly that the DBSA is really focused on is providing project preparation facilities and some early-stage equity capital to develop projects to bankable feasibility study. And that’s funding for bankable feasibility study work, some of which is concessional, but also assisting clients, whether they are investors and the like to actually work to develop projects and project development teams as well. And we’re hoping that through these interventions around project preparation, funding, and as well as early-stage risk appetite, that we’re able to contribute to this more robust pipeline of projects.
Then secondly is building on the momentum and creating integrity in the market. That’s essential. Long-term success of carbon markets is very much built on integrity and transparency. Reporting and verification systems and the like need to be robust, whilst that’s an obstacle, it’s something that we’re working towards improving, which I think for the long term is going to be absolutely pivotal for success.
We think Africa is well positioned. There’s no question that the continent is blessed with abundant natural resources. It has significant renewable energy potential, particularly across wind and solar. We think there is growing investor confidence and investor interest in the geography. There’s a very close alignment between carbon markets and the development imperative. And we are seeing increased policy engagement across a number of stakeholders. So we’re really positive that Africa is going to be able to take advantage of the opportunity.
We do realise though, that to be able to take advantage of the carbon market opportunity, it does require strong institutions, greater funding into project preparation and project development. It does require transparent governance systems.
And I think finally, we do need to look at innovative financing solutions and innovation to ensure that climate finance can be deployed at scale and we can move away from carbon market finance or climate finance that is done on an ad hoc, sporadic basis and way, and rather in a programmatic way so that we can get the financing at scale. And key to that is innovation, and I believe trying to find financing solutions that are going to meet the requirements of providers of capital right across the capital stack. So a risk-adjusted return profile that is going to attract the right amount of capital for the appropriate risk, so that financial innovation and engineering to be able to deliver that is going to be important. But if we are able to do this successfully, we think Africa stands on the cusp of a great opportunity.
The key message from our side is that it’s so much more than just about generating carbon credits, and that carbon markets should very much be viewed as a strategic development finance instrument. For us at the DBSA, carbon markets represent an opportunity to improve bankable feasibility, project bankability and provides an opportunity for us to crowd in private sector and other sources of institutional capital and to help bridge Africa’s infrastructure gap. So it’s much broader than simply carbon credits, but infrastructure more generally.
The second message is that we would very much like to deepen relationships with other stakeholders, whether those be government, fellow development finance institutions grappling with the same issues that we are, whether they’re commercial banks, project developers and project sponsors. So we would like to use the opportunity to develop deeper partnerships with those critical stakeholders.
We think that Carbon Markets Africa Summit is critically important because they place African priorities and some of the African needs at the centre of the carbon market discussion. And this is important. Africa has a voice. We believe it’s going to play an important role for various reasons in the carbon market story. And so we think it’s very, very important for these type of events, as a platform for that discussion.
I think it’s absolutely fantastic. Not only is Rwanda a fantastically welcoming destination, but it’s played a strong and centralised role in leadership, in climate action, in developing carbon markets, and for green deployment. So it’s absolutely appropriate that Rwanda is a host and Kigali is a fantastic city for it.
And we think more broadly that African countries, whether it’s Rwanda or others that have played an important role, like Zambia and Ghana, that continue to play an important role to shape climate solutions going forward and drive practical application of market opportunities, which I think is very important.
And I think finally, it sends an important and strong signal that Africa is not simply participating in global carbon markets, but is an important player. And whilst we only generate as a continent less than 4% of greenhouse gas emissions, we can play a critical role in the solution, and part of that is carbon markets.
Africa's Green Economy Summit connects industry professionals and organisations to information and each other in a carefully curated live environment. Its purpose is to support in mobilising investments for green projects to scale up and industrialisation, which will have a significant impact on environmental sustainability and economic growth.
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