Description
The bulk of climate funding has so far targeted public sector projects, but there have been increasing calls, both nationally and internationally, to channel more funds to the private sector. Very little, however, is known about how these funds reach the private sector and who gets access. In this paper, we examine how climate finance from multilateral development banks (MDBs) trickles down to the private sector in Africa–the largest employer on the continent. Using cases from Kenya, Morocco, Nigeria, and South Africa, we explore the rationales behind the pathways through which climate-linked funds from the African Development Bank reach their private sector beneficiaries: direct access and local financial intermediaries. Drawing on interviews with private sector stakeholders and MDB officials as well as board documents from major multilateral climate funds, we find that the choice of pathways is influenced by concerns over risk, efficiency, and transaction costs. Our paper contributes to the literature on the dynamics of private sector financing by MDBs and advances the growing body of work on multilateral climate finance flows to low and middle-income countries.
