As the United Arab Emirates prepares to host the COP28 climate summit later this year, the Gulf state is increasingly conspicuous by its presence in Africa’s burgeoning green finance sector. A group of Emirati investors unveiled a landmark $4.5bn pledge to invest in clean energy projects on the continent at the Africa Climate Summit earlier this month.
Mariam Almheiri, the country’s minister for climate change and the environment, tells African Business that her country is serious about playing its part in delivering climate finance. “The UAE is ready with money and with technology to help Africa with its transformation,” she says.
The UAE’s ability to pour billions of dollars into investments at home and around the world reflects the wealth accumulated through decades of oil and gas production. But it is the country’s experience in developing green energy and industry projects – including some of the world’s largest solar parks – that puts the country in a strong position to contribute to Africa’s energy transition, the minister says.
Investment flows
While the UAE has long had a significant political and economic presence on the continent, particularly in parts of northern and eastern Africa, the country has been ramping up its economic engagement in recent months.
The UAE and Nigerian governments clinched a deal on 12 September to enable UAE-based Emirates and Etihad Airlines to return to the country after a year-long hiatus caused by a row over the repatriation of funds. The agreement reflects the UAE’s focus on tapping into leading African markets.
But the most significant recent engagement is undoubtedly the UAE’s promise to pour $4.5bn into African green energy. “We are walking the talk, stepping up where we can, to say: this is our contribution to help Africa in their energy systems transformation,” says Almheiri.
The planned investment is spearheaded by four entities – the Abu Dhabi Fund for Development, Etihad Credit Insurance, Masdar and AMEA Power – all of which have close ties with the UAE government. The president of COP28, Sultan Ahmed Al Jaber, is in fact also the chair of Masdar, a state-owned renewable energy company – in addition to serving as minister for industry and advanced technology and as CEO of national oil company ADNOC.
Almheiri confirmed to African Business that the $4.5bn pledge came about through the UAE government working with the four institutions.
The minister offers a variety of reasons for the UAE’s enthusiasm for supporting the energy transition in Africa. “Africa is so close to the UAE. We have great strategic relationships with a lot of the African countries,” she says, pointing out the history of trade and tourism links between Africa and the Emirates. But Almheiri adds that her recent visit to Nairobi for the Africa Climate Summit was “a bit of a reality check” that illustrated the need for international partners to support the continent’s youthful and rapidly growing population. “They were saying that they have 30m new people coming into the workforce every year. So, there’s a huge potential that we have there, but it’s really important that we don’t forget the aspect of livelihoods,” she says.
“When we talk about anything to do with transforming the energy system, transforming the food systems, we need to ensure we’re looking into the livelihoods of people.”
The minister also acknowledges that Africa is bearing the brunt of climate change, despite contributing only a very small share of cumulative global emissions. Noting that rainfall is becoming less reliable and droughts more frequent, Almheiri says that ensuring that “things get fixed” is vital to “keep Africa intact” and “stop the migration routes”.
UAE flexes climate finance muscles
Ultimately, the UAE’s focus on Africa is the result of the country’s determination to showcase its global leadership on climate finance as it gets ready to welcome the world to Dubai for COP28 in November and December. Upscaling investment in renewable energy and accelerating the energy transition will be one of the key themes of the conference.
“The climate finance subject is something that’s coming up in all the conversations that we’re having,” says Almheiri. She is very much aware that Africa is growing more vocal in demanding that long-standing promises to provide funding for sustainable development are turned into a reality. “I’ll tell you why they’ve been really pushing on this: there was a $100bn commitment that was supposed to be done 14 years ago,” says Almheiri, referring to a promise made to developing nations at a climate change summit held in Copenhagen in 2009. “The African nations kept saying to our COP28 president, ‘where’s this money?’ ”
African governments agreed at the Nairobi summit that their focus at COP28 will be on pushing for governments in the Global North to deliver on previous commitments. These also include the loss and damage fund pledged at last year’s COP as a way to support the countries most vulnerable to the impacts of climate change.
“They have projects ready, but they always say the availability, affordability and accessibility of finance is the biggest challenge that they’re facing,” says Almheiri.
“We’ve realised we cannot just wait,” she concludes. “Every country has to also step up and do something. And because we’re hosting the world, we took it in our own hands to say: Okay, let’s bring some of these entities together and see what we can do.”
Implementation challenges
The UAE will work with Africa50 – the infrastructure investment platform part-owned by the African Development Bank – to help select projects to receive investments under its green energy initiative. Almheiri says that Africa50’s input will be vital to the initiative’s successful implementation.
“Creating funds, or making funds available, is one thing,” she says, “but actually ensuring that we are speaking to the right entities to get it implemented on the ground is yet another challenge altogether.”
Recent events illustrate that the importance of having an African partner cannot be overstated. Indeed, some forays into Africa by UAE-based investors have run into problems that might have been avoided through more sensitivity to local political and social realities.
In particular, several planned deals involving Dubai-based investor Blue Carbon have generated controversy.
The firm has negotiated a draft agreement to lease a huge concession in Liberia, covering almost 10% of the country’s territory. It plans to use the land to generate carbon credits through restoring and protecting forests.
Campaigners and opposition parties have heavily criticised the planned deal, equating the imposition of a concession without the agreement of forest communities to “carbon colonialism”. Blue Carbon has not commented publicly.
Nevertheless, the UAE is not backing down in its push to be a leading player in Africa’s nascent carbon markets. In a separate announcement at Africa Climate Week, a group of Emirati entities, acting through an investment vehicle known as the UAE Independent Climate Change Accelerators, made a non-binding pledge to purchase $450m in carbon credits in Africa.
The credits will be purchased via the African Carbon Markets Initiative, which was launched at last year’s COP27 summit, with the aim of achieving a 19-fold growth in Africa’s carbon markets by 2030.
