CDC Group, the UK’s development finance institution and impact investor, is to invest over £3 billion to support emerging economies in Africa and Asia to combat the climate emergency.
The commitment, made Teusday at COP26 in Glasgow, will make CDC one of the world’s largest climate finance investors in Africa and select South Asian markets. The announcement contributes to the ‘Clean Green Initiative’ announced this week by the Prime Minister to help developing countries take advantage of green technology and grow their economies sustainably.
The £3 billion of climate finance from CDC will be invested over the next five years across a number of different sectors, such as renewable power, infrastructure and agriculture, including forestry. It will be deployed to support emerging economies to meet their Paris Agreement goals, and to adapt and become more resilient to the impacts of the climate emergency that are already being felt today.
CDC expects power generated from rapidly expanding portfolio of renewable power investments to double in size over the next five years. The proportion of electricity generated by renewables across CDC’s entire energy portfolio will grow from 32 per cent to about 70 per cent over the same period, as new investments come online.
CDC will also increase venture capital investment in early stage, technology-based businesses that have the potential to play vital roles in the fight against climate change.
This will be supported by the £200 million Climate Innovation Facility announcement by the UK Government at COP26. The new fund has been set up to provide finance for the most pioneering climate solutions in developing countries. By testing – and then scaling – the most effective solutions, CDC will aim to seed new markets for investment.
The first beneficiary of the new fund is Pula, a Kenya based agritech business. The purpose of the capital is to pilot a new “Pay-at-Harvest” insurance product, something which is virtually untested in Africa but has the potential to significantly increase smallholder uptake of insurance, delivering both development and climate impacts.
Nick O’Donohoe, Chief Executive of CDC, said: “The financial commitment announced today will mean that CDC will become a global leader in climate finance in Africa and South Asia. COP is about making specific commitments to act, and this is demonstrated by a doubling of our financial support to those countries most vulnerable to the ravages of the climate emergency”.