As climate change intensifies, fostering collaboration among governments, development banks, and private investors is essential to ensure climate resilience, especially for the most vulnerable communities in Africa, writes Michael Hillary.
Global climate forums like COP28 and COP29, alongside discussions at the G20 and FiCS 2025, have amplified calls for urgent, scaled-up investments in climate adaptation. Leaders and experts have consistently underscored the need for innovative financing solutions to protect communities and ecosystems, particularly in regions where financial risks deter private sector participation.
Development Finance Institutions (DFIs) have emerged as pivotal players in addressing these challenges. By deploying financial tools such as guarantees, blended finance, green bonds, and climate risk insurance, these institutions help derisk climate projects, making them more appealing to private investors.
Blended finance, in particular, has been lauded for its transformative potential. By combining concessional public funds with private capital, this approach reduces perceived risks, incentivising private sector participation in critical areas such as renewable energy systems, climate-resilient agriculture, and water infrastructure.
The economic and social benefits of derisking mechanisms are undeniable. Investments in climate-resilient agriculture, for instance, safeguard food security, boost productivity, and create jobs in vulnerable rural communities. Similarly, renewable energy initiatives support economic diversification while reducing reliance on fossil fuels, aligning with global sustainability goals.
The Development Bank of Southern Africa (DBSA), together with cohosts AIIB (Asian Infrastructure Investment Bank) and AFD (Agence Française de Développement), have set a benchmark for innovation in climate adaptation financing. Recognised at COP29 for its exemplary efforts, DBSA has successfully used blended finance, guarantees, and climate risk insurance to mobilise private capital for critical infrastructure projects across the continent.
Key initiatives by DBSA include the Climate Finance Facility, employing a green bank model to derisk private sector investments in renewable energy and infrastructure. The Water Reuse Programme is another initiative that enhances water security by developing innovative solutions to address droughts and floods. The Embedded Generation Investment Programme drives renewable energy adoption through strategic partnerships with the UN’s Green Climate Fund.
These initiatives showcase how tailored financial solutions can align global climate priorities with the pressing needs of local communities, fostering resilience and sustainable growth.
The key takeaway from COP28, COP29, and ongoing dialogues at the G20 and FICS 2025 is clear: scaling climate adaptation financing requires unprecedented collaboration. Governments, financial institutions, and the private sector must unite to unlock capital for adaptation initiatives that address both global climate challenges and local development needs.
Derisking mechanisms, such as blended finance, guarantees, and green bonds—serve as critical tools to bridge the gap. These efforts not only attract private capital but also ensure that investments deliver meaningful social and economic benefits, building a more resilient future for vulnerable communities.
The time for action is now. By fostering collaboration and deploying innovative financing solutions, we can make climate resilience a reality for all, ensuring no one is left behind in the fight against climate change.