The African Development Bank has launched a multi-donor trust fund seeking to stimulate the growth of the continent’s circular economy, with support from the Finnish government and the Nordic Development Fund
Circular economy initiatives are becoming a new focus for both development finance and private institutions seeking sustainable investments.
In Africa, the sector provides a major opportunity to tackle mounting waste disposal problems through recycling and repair, while reducing demand for costly new products or raw materials, as well as creating jobs.
But the sector remains at a formative stage in much of the continent. The latest initiative seeking to stimulate growth in Africa’s circular economy is a €4m multi-donor trust fund, launched by the African Development Bank (AfDB).
The Africa Circular Economy Facility will operate for five years with funding from the Finnish government and the Nordic Development Fund (NDF).
“Circular economy is key for climate change adaptation and mitigation, and has vast potential to create jobs, improve productivity and strengthen the economic competitiveness of African countries,” Henrik Franklin, director for portfolio origination and management at Nordic Development Fund (NDF) said on launching the facility.
The facility will target institutional capacity building to strengthen the regulatory environment for circular economy innovations and practices and support to the private sector through a business development program.
Coupling economic growth with sustainability
It will also provide technical assistance to the African Circular Economy Alliance (ACEA), whose secretariat is hosted by the AfDB. The ACEA was founded during the 2016 World Economic Forum with a view to developing the circular economy, while capitalising on its development opportunities.
Member countries include Ghana, Cote d’Ivoire, Nigeria, Rwanda and South Africa. Among its strategic partners are the AfDB, the Global Environment Facility, World Economic Forum and the Finnish government.
“Putting in place a dedicated financing vehicle for the circular economy positions the bank as a champion of solutions that decouple Africa’s economic growth from unsustainable extraction of natural resources,” Al-Hamndou Dorsouma, officer-in-charge for climate change and green growth at the AfDB, said.
The facility is expected to build on the AfDB’s areas of interest in its portfolio of circular-economy aligned operations, including renewable energy, ‘climate-smart’ agriculture and green manufacturing sectors.
Progress towards the UN Sustainable Development Goals, and helping countries meet carbon emissions targets—their Nationally Determined Contributions established under the Paris climate change agreement – will also be a consideration.
Circular economy principles play a central role in advancing the African Development Bank’s High-5 development priorities for the continent, according to the bank. Set out in 2015, these are power and lighting, food, industrialisation, greater economic integration, and improvement in the quality of life of Africans.
Among other initiatives to support development of the circular economy, the bank has backed efforts to cut down on plastic waste and improve plastic recycling in countries such as Cote D’Ivoire and Uganda.
The need to ramp up the circular economy is not just an African imperative, if world economies are going to operate on a more sustainable basis. The 2022 Circularity Gap Report found that only 8.6% of the worldwide economy can be labelled as ‘circular’, despite the financial, economic and social benefits of wider adoption.