There is widespread acceptance that significant increases in financial resources are needed to help countries undertake climate compatible development (CCD), that a significant portion of such resources is expected in the form of private sector investment, and that public finance and incentives shape such investment. There is however, little global—let alone regional—data on private investment in CCD beyond that to renewable energy. This paper applies a methodology to address this data gap and to support greater understanding of the role of public incentives in shaping private investment in climate relevant sectors. Because of the granularity needed to understand private investment choices as they relate to CCD, the paper focuses on lessons learned from analysis of four countries and two sectors: Uganda and Namibia’s energy sectors and Zambia and Tanzania’s agricultural sectors.
Cross-cutting findings suggest:
• There remains a significant gap in support to the diffusion of decentralised and smaller-scale technologies (hard and soft) which are particularly relevant for Africa;
• Creating the enabling environment for private investment in CCD requires greater support at market level and increased policy coherence within climate relevant sectors;
• Designing interventions to mobilise private finance for CCD requires a clear understanding of the distinct roles of the finance sector and other sources of capital for businesses and households;
• Public support to market-level information collection and dissemination can help facilitate private finance for CCD; and
• Lesson learning on effective tools to mobilise private finance for CCD will require changes in the approaches used for collection and dissemination of investment data at national, regional and international level.
The paper comprises: an introduction to the available global data and limitations, summary of the applied methodology, detailed country and sector case studies, and findings at the sector, country and regional level.