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UNDP INTERVIEW: “We don’t have enough green investment banks and have a big gap regarding microfinance”

Exclusive interview with Tomas Sales, Special Advisor, UNDP Africa Sustainable Finance Hub (ASFH), about the organisation’s new initiative, the Africa Green Business and Financing Initiative (AGBFI), the global launch of which took place at the recent Enlit Africa in Cape Town.

Tomas, thank you for your time today. Let’s start about you and what your function entails.
I work for the UNDP. I’ve been working there for over a decade now. I am a special advisor with the UNDP Sustainable Finance Hub. It’s what we call the Pretoria Hub. We have a lot of country offices, but then we also have some regional hubs.

Tell us about today’s launch and the research that led to this new initiative.
Yes, for us it’s about the future. As I mentioned before, I kind of run a portfolio on the private sector. And yes, we have not forgotten the traditional challenges of the private sector, particularly in terms of access to finance, the micro finance institutions, the informal enterprises, the SMEs, the startups, all of that is still there. But thinking about the future, which is coming very fast to us, we cannot ignore it. We need to work on green business. And this research was specifically to find out what’s the status of green business in Africa, what works, what doesn’t work in terms of the business models and very important, how to how those business models are finance, and how can we scale it up? What are the gaps?

What does the report say? What are the stats?
The report basically says that the sector in Africa is evolving. It’s still at an early stage, but there are very interesting cases from all over the place. For our surprise, we thought we needed to go somewhere else, but we find case studies on ranging from renewable energies to sanitation to immobile mobility. We found and reviewed 200 cases. Of those, we picked eight from eco-tourism and other areas which are very relevant to Africa and there are very important lessons that come from across the board in each of these cases. The report tells the story in each of these cases, why they work and what the opportunities are to scale them up.

The other big thing about the report was, generally speaking, what is missing in Africa to build the green economy. And there we make five strategic recommendations.

One is that in the financial sector itself, we don’t have enough green investment banks. We, for instance, have a big gap regarding microfinance. So if you want to give and support entrepreneurs in rural areas and others, there is no such thing as green microfinance. Can we innovate towards that? The other area is the critical area related to education. You know, you have carbon markets and all that. It’s so new, it’s so misunderstood. There’s a lot of suspicion. One of our big recommendations is for Africa to build some kind of educational system and training and also for young people to get involved in entrepreneurships, voluntary activities. If we do that now, we’ll build a culture that requires to build the green economy eventually.

What is the Africa Green Business and Financing Initiative that you launched today?
The initiative is basically trying to tell the private sector in Africa that this concept of fighting climate change, building environmental sustainability, protecting and enhancing the biodiversity. There is a business opportunity underlining it. We did the research and the numbers are out there. They are huge. And it’s true, there are some gaps and we recommend these five specific strategic areas. But if business takes the initiative, there are huge opportunities. And the only two things which come across is 1: you need to be very innovative and 2: you have to have superior partnerships, because you can’t do it alone.

Having done all this research, which of the sectors in the green economy in your view is the most dynamic or excites you the most?
From the report point of view, clearly renewable energy: The vast amounts of sun power are something which is there for Africa to realise the big opportunities, especially not only linked to consumption but to the productive use. It’s actually a very powerful inclusive mechanism to bring the rural areas and some of the disadvantaged communities into it.

If you want to see how that is happening, please check out a company called M-KOPA out of Kenya. They have developed a methodology to deliver solar systems, but at affordable prices, by mixing the solar with digital systems and data. So that’s a bit of a revolution coming out of them. I bet that company is going to be a unicorn.

You now have this information and these recommendations. What is next in your view?
The UNDP is a field-based organisation and we did this because we wanted to equip our member country partners with the information about what is really happening, what works, what doesn’t work, how do you develop and what are those incredible business models? How do you finance it? Now we’re going to move to a second stage, which is helping those countries. We have three now, but, sub-Saharan Africa has got 45 on our portfolio. And what we want to do is basically help them to develop private sector action roadmaps where we’ll identify specific opportunities, specific gaps, and we’ll also try to generate some model transactions.

So we’re building the momentum. There’s a way to go, a lot to do, but for sure, there are exciting opportunities. And in this case, because we know what it takes, we know what works. We have some good examples, I think, and we’re preparing the fertile ground for action, which is what really matters as a development organisation. Our currency is impact, positive impact. Let me underline that.

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