The UAE has pledged $4.5 billion in a financial initiative to accelerate clean-energy projects in Africa. The announcement was made by COP28 President-Designate Sultan Al Jaber, months ahead of Dubai hosting this year’s United Nations climate summit.

Abu Dhabi’s clean-energy company Masdar, the Abu Dhabi Fund for Development, the Etihad Credit Insurance and the Dubai-based renewable energy company AMEA Power will provide the funding. Additionally, Africa50, an investment platform established by African governments and the Africa Development Bank, has also joined the initiative.

The report further stated that the Abu Dhabi Fund for Development will provide $1 billion of financial assistance, while the Etihad Credit Insurance will provide $500 million of credit insurance to reduce risk and unlock private capital.

Masdar is pledging $2 billion of equity and will mobilise an additional $8 billion in project finance targeted to deliver 10 gigawatts of clean energy capacity in Africa by 2030.

AMEA Power will help fund 5 gigawatts of renewable energy capacity in the continent by 2030, mobilising $5 billion, with $1 billion in equity investments, and $4 billion from project finance.

African Development Bank’s Africa50 investment platform will act as a strategic partner to help identify initial projects, according to a statement.

“The initiative will prioritise investments in countries across Africa with clear transition strategies, enhanced regulatory frameworks and a master plan for developing grid infrastructure,” COP28 President-Designate Sultan Al Jaber, said at the inaugural Africa Climate Summit on Tuesday.

The COP28 President-Designate also highlighted multiple action points that require the coordinated efforts of African leaders and the international community to reduce barriers to investment.

These include restoring the financial sustainability of local utilities and modernising basic energy infrastructures, clarifying development processes and eliminating the red tape delaying market lead-time, in addition to eliminating restrictions to capital flows and accessing adequate and affordable risk mitigation measures.

"This initiative builds on the UAE's track record of commercially driven, innovative blended finance solutions that can be deployed to promote the adoption of clean energy in emerging and developing nations. This multi-stakeholder partnership approach is designed to accelerate sustainable economic progress, address the challenge of climate change and stimulate low carbon growth,” Al Jaber said.

The news comes a day after the UAE Carbon Alliance pledged an intended purchase of $450 million in African carbon credits by 2030 from the Africa Carbon Markets Initiative (ACMI) at the African Climate Summit, which is being held in Nairobi.

The ACMI was launched at Egypt’s COP27 summit last year to boost the continent’s carbon credit production 19-fold by 2030.

The ongoing African Climate Summit in Nairobi, which runs until Wednesday, has seen several organisations pledge support to the continent through funding initiatives. The news has been welcomed by African nations following a report by the Climate Policy Initiative, which stated that Africa was just getting 12% of the finance needed to manage the impact of climate change.

The report further stated that close to $250 billion was needed annually to help African countries adapt to sustainable projects.

At the ongoing summit, Kevin Kariuki, a vice president at the African Development Bank, told Reuters that African states would push at the COP28 climate summit for the expansion of special drawing rights at the International Monetary Fund that could unlock $500 billion worth of climate finance, which could be leveraged up to five times.

The UAE is set to host the annual climate summit in Dubai from November 30 until December 12.

(Writing by Bindu Rai, editing by Seban Scaria)