Why Africa Needs a Green Bank to Develop Its Own Renewable Technologies

Source: French to English Tester Published on: 2026-04-02

Source: The Conversation – in French– By Michael Olabisi, Assistant Professor in the Department of Community Sustainability (CSUS) and the Department of Agricultural Food and Resource Economics (AFRE), Michigan State University

Climate change represents a major challenge for the livelihoods of many people in African countries, who have only a tiny share of responsibility in this phenomenon. The multiplication ofextreme weather phenomena(flooding, heatwaves and droughts) considerably worsen hunger, insecurity and population displacement. The continent holdsabout 30%essential minerals for the future transition away from fossil fuels. However, Africa mainly exports these raw materials, leaving companies from other countries to reap the benefits of manufacturing low-carbon technologies and digital infrastructures. Economists specializing in sustainable development Michael Adetayo Olabisi and Howard Steinofferthe creation of a new African “green bank” as a solution.

How would the African green bank work?

Our vision is that this bank be created by African governments in the form of a kind of public bank, collectively owned by the countries of Africa. Such a bank would have the capacity to access international financing that is not available to countries individually.

Management, capital, and voting structure would be entirely controlled by African countries. This would help avoid the obvious problems faced by other pan-African organizations. These often depend too heavily on donor aid, which has undermined sovereign decision-making. (For example,42% of voting rightsof the African Development Bank are controlled by non-African countries.)

LikeJapanese banking system, the African green bank could have the possibility to take small stakes in projects or companies benefiting from loans. This would allow the bank to monitor the project and generate income.

We propose that the bank be composed of seven divisions. This would allow it to provide various complementary services, fill gaps in capabilities, while allowing each division to specialize. The service divisions we propose are as follows:

Green energy production.
Agricultural activities and associated value chains using green technologies.
Support for the processing and manufacturing from critical minerals such as lithium and cobalt. (These raw minerals are generally sent abroad to be processed into components intended for renewable energies.)
Manufacturing and services related to adaptation to climate change, such as support for African companies that manufacture and install solar drip irrigation systems for areas affected by drought caused by climate change.
An investment division responsible for attracting and facilitating foreign investments to key green industries in African countries.
A green outreach service. This would offer consultations with experts in engineering, sciences, and industrial policy on how to implement successful projects for the transition to renewable energy. A similar model existsIn Taiwan.
The seventh division would be the holding company. It would manage the ownership shares in the divisions listed above. It would specialize in monitoring and reporting on the progress of projects.

The African green bank would provide financing, but it would not just be a financial institution. It would be a continental industrial policy organization aimed at supporting and stimulating all necessary activities in Africa for a transition to a sustainable economy based on renewable energies.

Regional development banks and international financial institutions serving African governments have apoor recordin the matter ofpromotion and financingin general, and green energy and manufacturing industry in particular.

This bank is what Africa needs to finally break with the long-standing colonial model of extracting and exporting raw materials.

The international financial architecture, with its currency hierarchy, makesaccess to climate financingdifficult and costly, and leaves the poorest countries in Africa behind compared to the rest of the world. For example, sub-Saharan Africa will only have access to9% of fundswhich it needs to mitigate climate change between 2024 and 2030. This is by far the lowest level of climate financing in the world.

The continentlackalso national and sub-regional development banks specialized in green industrialization. A green bank could bring together in one place rare skills: high-level engineers, scientists, industrial planners, and financial experts.

How would this change the current functioning of climate financing at the global level?

Africa and other regions have receivedpromisesof funding foradaptationto climate change by the Northern countries that are the origin of climate change.

We propose that these countries allocate the transition costs to the green bank, so that it has a capital base in strong currencies. African countries should also contribute to the bank, based on the size of their gross domestic product. The funds paid into the bank should be a mix of currencies from the different African countries and strong currencies.

Gold deposits could be used instead of strong currencies. Bonds would be issued in Africa and on international markets to finance green projects.

The green bank would grant loans in African and non-African currencies to projects supported or guaranteed by the State. It would thus finance the green industry. The volume of financing granted would be proportional to each country’s contribution to the capital. We believe that repayments could sometimes be denominated in a basket of currencies.

The bank would be the engine of green industrialization. This could help stabilize the region’s currencies and promote dedollarization by giving African countries the possibility to repay their loans in strong currencies with local currencies. The power of the US dollar would also be diminished if African countries created factories to manufacture components for green energy and sold them on export markets.

As the holder of many currencies, the bank could also facilitate transfers within Africa. For example, payments from a solar park in Tanzania to a solar cell factory in Kenya or Ethiopia could be credited directly to each project’s balance at the bank. Ultimately, the bank could become a clearinghouse for African currencies, thus reducing the need to convert them into US dollars before transactions.

How would the African green bank operate with other development banks?

High-income countries might be skeptical about entrusting climate financing funds to governments they perceive as corrupt or less technically competent. The green bank would offer a transparent and accountable channel for climate financing. This could reassure existing lenders and donors. It would also facilitate co-financing with institutions such as the World Bank and regional development banks, provided they accept the priorities of the African green bank.

The major African development banks, such as the African Development Bank and the African Export-Import Bank, are shifting towards priorities more aligned with the climate. But there is nono clear evidence of progresstowards financing adapted to climate change

We propose that the green bank works in close collaboration with other development banks as common objectives evolve. At the same time, it should continue to focus on how industrial policy can be used to strengthen countries’ resilience to climate change.

What are the main obstacles to its implementation?

The necessity of a new bank to address the industrial, financial, and climate challenges of the continent is indisputable. The creation of such a bank will not be an easy task. It will require a consensus among the countries of the continent. Northern countries will also have to be willing to allocate funds aimed at fighting climate change to this new organization.

The international order is currently fractured. In the face of growing concerns about the dominant powers and their competing behaviors in today’s world, the time may have come for independent nations to forge new alliances in order to help build a better future for Africa.

Michael Olabisi benefited from funding from the International Development Economics Associates (IDEAS).

Howard Stein benefits from funding from the International Development Economics Associates (IDEAS).

–ref. Why Africa needs a green bank to develop its own renewable technologies –https://theconversation.com/why-africa-needs-a-green-bank-to-develop-its-own-renewable-technologies-279503