IMANI Africa highlights barriers to private sector investment in Ghana’s climate change action
IMANI Africa has unveiled the formidable challenges faced by private sector investors in Ghana’s climate change initiatives. The Think Tank’s comprehensive analysis points to an economic, policy, and regulatory environment that lacks the necessary support to attract substantial private sector capital into climate action projects.
The report underlines a critical gap in Ghana’s climate policy landscape, with the absence of a unified legal framework governing climate activities. This glaring deficiency has resulted in a lack of predictability in policy direction and focus, rendering prospective investors hesitant to commit to long-term climate projects.
A significant concern highlighted by the Think Tank is the dearth of an explicit carbon price, despite the country’s efforts to establish a framework for engagement in international carbon markets and non-market approaches. The lack of this crucial price signal undermines investor confidence, perpetuating a reliance on fossil fuel investments, primarily driven by the substantial impact of petroleum revenues on energy security and the government’s macro-fiscal situation.
IMANI Africa emphasizes the pivotal role of private sector investments in supporting a green transition, necessitating the phased-out redirection of fossil fuel investments towards sustainable alternatives. However, the absence of a clear financing plan linking priority areas to specific funding sources raises uncertainties and impedes effective climate action implementation.
Analyzing Ghana’s climate finance landscape over the past decade, the report reveals an increasing focus on accessing international public climate finance through Multilateral Financial Institutions (MFI) and Bilateral Financial Institutions (BFI), alongside results-based payment systems. While Ghana has developed a relatively stable institutional framework for accessing international public climate finance, the reliance on grants outweighs efforts to explore other viable debt and equity instruments.
The Think Tank highlights the Ministry of Finance’s robust framework for accessing and utilizing Global Climate Funds, suggesting its potential adaptability to access diverse finance sources employing similar modalities.
As Ghana strives to accelerate financing for its climate priorities, IMANI Africa’s report serves as a wake-up call, urging the government to address the barriers hindering private sector investments. A more supportive economic and regulatory environment, complemented by a transparent and coherent financing plan, will be vital to attracting private sector capital and advancing the nation’s climate ambitions in the pursuit of a sustainable future.
