Green Finance Mechanisms in Developing Countries: Emerging Practice

To counter the devastating impact of COVID-19, calls are growing for countries to ‘build back better’ in an effort to create a more inclusive and sustainable economy that is climate resilient. Africa is facing glaring development and climate risk challenges, but the post-COVID-19 recovery plan offers it an opportunity to revitalise its economy using a green framework. In particular, green finance mechanisms can be employed for the continent’s green recovery. The objective of this policy briefing is to explore best practices in channelling investment towards a green economic recovery to promote inclusive and sustainable investment. Examples of such best practices include investment infrastructure and renewable energy, green/environmental funds and other market-based mechanisms, ensuring stimulus investments focus on green fiscal reform, redirecting existing funding, greening the financial sector and developing green segments.