We interview experts in the field of climate finance to share insights on how cities can access finance for sustainable, resilient development. In this video, Olympus Manthata from DBSA is interviewed by ICLEI Africa’s Rebecca Cameron.
Highlights from this video
Development Finance Institutions (DFIs) play a critical role in unlocking climate finance. These institutions assist with two key factors: pulling in private investment and ensuring the regulatory environment is ideal for implementation of projects.
When looking at the expectation that is placed on the private sector, in many cases depending on the sector, there are regulatory or policy-related barriers. DFIs like the DBSA are usually government-owned and therefore one can assume that, due to proximity, DFIs would be able to influence things around the policy and regulatory issues, to some extent.
On the other hand, DFIs are also co-funding with the private sector and commercial banks so one could argue that these institutions understand the issues expected, for example, the risk-return profile financiers will be comfortable with.
Challenges to unlocking climate finance brought on by Covid-19 and how to work around them
One of the immediate impacts was liquidity constraints, as a DFI, one of the immediate impacts we have felt is liquidity constraints. In many cases that constraint leads to the cost of funding sky-rocketing. In the municipal space resources may be diverted to other, or ‘more urgent’ matters.
The question then becomes: what is the best way to respond, in the midst of these challenges? What remains useful is access to appropriate financing instruments as well as the ability to channel the concessionally that they are receiving from sponsors in order to make the implementation of projects possible.
In the process it is also important to keep reminding ourselves that the climate emergency should not be a casualty of the challenges we see emanating from the Covid-19 pandemic.