Commercial International Bank (CIB), Egypt's largest private sector bank, participated in a session titled ‘Finance for Climate-Smart Agriculture and De-risking the Adaptation and Agriculture Sector”, hosted by the International Fund for Agricultural Development (IFAD). The session was held on ‘Adaptation and Agriculture Day’ at COP27 in Sharm El-Sheikh.
IFAD Associate Vice President Strategy and Knowledge Department Ms. Jyotsana Puri moderated the session, and panelists included World Bank Manager for Global Engagement in the Agriculture and Food Global Practice Mr. Julian A. Lampietti; CIB Chief Sustainability Officer Dr. Dalia Abdelkader; EBRD Head of Advisory, Agribusiness Ms. Iride Ceccaci; Rabobank Strategy Lead ACORN Ms. Emma Van de Ven; Vodafone Group CEO Mezzanine Mr. Jacques de Vos; and Global Ambassador of IFAD Ms. Sabrina Elba.
CIB's Chief Sustainability Officer Dr. Dalia Abdel Kader participated in presenting the "Brain Trust" construct, a new framework that demonstrates the role that adaptation finance plays in building sustainable and self-sufficient food systems. "Brain Trust" aims to address climate-related challenges in the region, sustainably securing the region's food and water resources and sustaining their growth. It also acts in support of Egypt's National Climate Change Strategy 2050, Egypt's NDCs, the newly launched national project Nexus Water Food and Energy (NWFE), and COP27's dual focus on Africa and adaptation.
"There are around USD 379 trillion in global funds available per estimates measured by the OECD Global Outlook. 1% of this amount is enough to address the SDG Gap, inclusive of adaptation finance,” said Dr. Abdelkader. “According to the World Bank, every dollar invested in adaptation yields seven dollars in overall benefits. The challenge now lies in innovating new business models and financial structures that address risk-adjusted returns and monetize social and environmental gains and losses."
Panel discussions highlighted that private financing contributes a mere 1.6% to adaptation finance. This absence is mainly attributed to the perception that adaptation projects are risky and not profitable, limiting their resourcing to public funding and concessional loans. Moreover, the lack of bankable and investable pipeline projects has mostly derailed adaptation finance and critically exposed developing countries to climate calamities, including starvation and drought. Promising developments are underway as several African countries launched National Adaptation Plans (NAPs) and Nationally Determined Contributions (NDCs). This foundational step was vital for expressing demand to various public and private stakeholders, and yet food and water projects still require setups that attract private investors, thus introducing a new role for banks.
H.E. Dr. Rania Al-Mashat, Minister of International Cooperation, said, “Financial institutions have a responsibility to develop proactive roles that further Egypt’s climate agenda. Through the NWFE program, a pipeline of projects will be made available to accelerate Egypt’s climate goals, and the launch of the “Brain Trust” program will help prove the invest-ability of adaptation in agricultural and water projects.”
"While COP27 aspires to reach an agreement on climate issues and mobilize pledged funds to developing countries, Africa - wrestling with starvation and drought - can't afford to be in the waiting,” exclaimed Dr. Al-Mashat. “From climate to geopolitical crises, Africa remains the most vulnerable continent, with millions of inhabitants either experiencing or on the brink of starvation. The continent is unduly paying the price for a series of crises not of its making, yet the solution will be Africa’s making.”
“Brain Trust” serves Egypt’s evolving climate goals and newly issued pipeline projects. An Africa-led initiative, it is a step towards mobilizing the "Billions to Trillions" framework and addressing the misalignment between global private funds and adaptation projects in sustainable and sufficient food systems in Africa. The initiative mobilizes African financial institutions to address the invest-ability of food projects and ensure that a solid risk/return formula is in place to address the concerns of global investors. It aims to migrate financing from the domain of public finance and concessional loans to private finance, and from seeking billions of dollars of broken pledges to trillions of sustainable investments. The initiative also includes a project-specific ‘Adaptation Finance Governance Mechanism’ that anchors the relationship between finance and science and comprises a checklist of must-dos to ensure lucrative risk-adjusted returns from innovation in project design, climate finance instruments, data disclosure, and reporting.