Mahmoud Mohieldin: Concessional Finance and De-risking Investments are Necessary to Scale-up Climate Finance in Developing Countries

Dr. Mahmoud Mohieldin, UN Climate Change High Level Champion for Egypt and UN Special Envoy on Financing 2030 Sustainable Development Agenda, said that mobilizing climate finance in developing countries can be done through a number of measures, foremost of which is the adoption of new policies for concessional finance and the activation of mechanisms to de-risk financing and investment in climate action.

This came during his participation in a roundtable meeting on Mobilizing Private Climate Finance in EMDCs, organized by GFANZ, IMF, WBG and COP28 presidency, with the participation of Marc Carney, Co-chair of GFANZ, Kristalina Georgieva, IMF Managing Director, Sultan Al Jaber, COP28 President-Designate, Ajay Banga, President of WBG, Janet Yellen, US Secretary of the Treasury, and Rania Al Mashat, Egypt Minister of International Cooperation.

The meeting also attended by Makhtar Diop, CEO of IFC, Danny Alexander, AlIB Vice President for Policy and Strategy, Marc Bowman, EBRD Vice President for Policy and Partnerships, Woochung Um, ADB Managing Director General, Werner Hoyer, President of EIB, Bo Li, IMF Deputy Managing Director, And a number of CEOs, and officials of funds, financial institutions, banks and companies.

Mohieldin noted that scaling-up climate finance in developing countries requires new policies for concessional finance that include low interest rates and long-term repayment and grace periods, de-risking financing and investment by activating credit guarantee and credit enhancement mechanisms, improving the legislative and regulatory environment for business to allow the flow of funds and encourage private sector to participate more in climate action, reducing the debt of developing countries through debt swaps and special drawing rights, activating foreign exchange guarantee mechanisms, and supporting local institutions and projects in developing countries.

Mohieldin stated that the HLCs has launched this week a paper of “Breaking Financing barriers for Just Climate Transition in Africa” that proposes specific measures to finance climate action on the continent and supports foreign exchange guarantee mechanisms.

The climate champion said that the Five Regional Roundtables Initiative launched by the Egyptian presidency of COP27 in cooperation with the United Nations regional economic commissions and the HLCs, which the UAE presidency of COP28 participates in its second edition, aimed at finding investable, bankable and implementable projects, and working on the flow of funds and investments for these projects.

He added that the initiative has resulted in about 400 projects in different areas of climate action, and has been shortlisted into about 100 projects to be presented to potential financiers, which has resulted in the closing of 7 deals so far with work continuing to reach more deals before COP28 in Dubai.

During his participation in the meeting of the Sustainability Finance Integrity Advisory Council, Mohieldin stressed the importance of finance integrity and the commitment of public and private funding to standards that enhance its efficiency in implementing climate action and achieving sustainability.

He said that finance integrity plays a pivotal role in bridging the climate and development finance gap, especially with the continuous increase of financial entities that are transitioning to sustainable finance and the interest of investors in contributing to climate and development action, explaining that setting the standards governing the mechanisms of this finance reassures investors about the environmental and social impact of their investments.