Approaching Green Finance in North Africa

This assignment was aimed at supporting Financial Sector Deepening Africa (FSD Africa) in the implementation of its Strategic Framework for Green Finance in North Africa by conducting a landscaping study of the five countries in the region (Algeria, Tunisia, Morocco, Egypt, and Libya), identifying green finance challenges and opportunities, and defining potential support modalities that could be pursued in the region. Specific focus areas of FSD Africa are the green value chains with potential high impacts in the target countries. The assignment was fully aligned with the Nationally Determined Contribution (NDC) commitments of the countries and the commitment of the UK government’s Foreign, Commonwealth, and Development Office to support clean and sustainable development in Africa under FSD Africa activities.   Throughout the implementation of this assignment, the Econoler team was guided by the three pillars of FSD Africa’s Strategic Framework for Green Finance – financing the green sector, greening the finance sector, and greening FSD Africa and its partners. These three pillars were clearly reflected in the two work streams of the assignment – Work Stream 1 was focused on identifying market gaps, bottlenecks, and opportunities for FSD Africa to add value and generate market momentum and Work Stream 2 on elaborating concrete market support modalities that build on FSDA’s strengths (expertise, regional presence, financial instruments, etc.) and suggested strategic partnerships with key stakeholders in North African markets.

Under the mandate, the Econoler team carried out the following tasks:

• Conducted a detailed analysis of the green finance landscape in North Africa (Egypt, Morocco, Tunisia, Algeria, and Libya) to identify gaps and appraise opportunities for FSD Africa to intervene and support financing in the green sector and green the North African financial sector with a focus on key green value chains relevant to the North African context;
• Identified and selected priority green value chains in line with the NDCs of the target countries and the Paris Agreement and shed light on the viability of mainstreaming climate and environmental considerations into the financial sectors of the target countries and the capability of FSD Africa to catalyze such change with the instruments at its disposal;
• Identified concrete high-potential projects and partnerships with suggested budgets, partnerships, and high-level activity plans that align with and operationalize the FSD Africa green finance strategic framework (financing green and greening finance);
• Provided introductions and early project development support by developing concept notes (in collaboration with consultants tasked with developing FSD Africa and the FSD Network Green Finance Framework to support technical teams in developing similar concept notes focused on green projects in sub-Saharan Africa);
• Supported deal preparation and provided ad hoc coaching to FSD Africa teams.

  The results of the work allowed FSD Africa to identify potential partnerships, projects, and opportunities for interventions in the green sector in North Africa and provided several concepts for support programs to be led by FSD Africa in partnership with different local or regional stakeholders.