Economists Propose African Green Bank to Finance Climate and Renewable Industrialisation

Development economists Michael Adetayo Olabisi and Howard Stein have proposed a new African green bank, collectively owned by African governments, to channel climate finance, support renewable energy manufacturing, and reduce the continent's historic dependence on exporting raw critical minerals. Sub-Saharan Africa is projected to access only 9 per cent of the climate finance it requires for mitigation between 2024 and 2030, the lowest share globally.

Africa holds an estimated 30 per cent of the minerals essential for the global clean energy transition, including lithium and cobalt, but currently exports these raw, allowing companies in other countries to capture manufacturing value. The proposed bank would be state-owned and collectively governed by African nations, with management, capital, and voting structures fully controlled by African countries, addressing the imbalance in existing pan-African institutions where, for example, 42 per cent of African Development Bank voting power is controlled by non-African countries.

The proposed seven-division structure would cover green energy production, agricultural value chains using green technology, critical mineral processing, climate-change adaptation manufacturing, foreign investment brokering, a green extension service providing expert consultations, and a holding company for monitoring and reporting. The bank would issue loans in both African and non-African currencies for state-sponsored projects, with repayments potentially in local currencies, supporting de-dollarisation. Bond issuance within and outside Africa would finance green projects, with gold deposits potentially used as hard currency collateral.

The proposal calls on global north countries to allocate climate transition funding to the green bank as part of their existing climate finance obligations, providing a transparent and accountable channel. The authors argue the bank is needed because regional development banks have a poor record in promoting green industrialisation, and the international financial hierarchy makes climate finance costly and inaccessible for poorer African countries. They acknowledge that establishing the bank will require continental consensus and global north willingness, challenging conditions given current geopolitical fragmentation.

Key figure — 9% of required climate mitigation finance accessible to sub-Saharan Africa between 2024 and 2030