How can PPPs solve climate finance’s ‘great paradox’?

Writing on LinkedIn, Makhtar Diop, managing director of the World Bank’s International Finance Corporation, and co-author Oliver Bate, chief executive officer at Allianz, have outlined what they define as the “great paradox” of climate finance. According to the authors, the paradox is that even though there is private capital willing and able to invest in net-zero projects, “ it often struggles to find its way into the countries, sectors and projects that need it most”. According to Diop and Bate, there are multiple reasons for this – ranging from middle-income countries’ risk-return profile to lack of green finance taxonomies in emerging markets. To solve the problem, Allianz and the IFC have created a template to channel private capital to net-zero projects in emerging markets through public-private partnerships (PPPs). The “Managed Co-Lending Portfolio Program” (MCPP) has already supported projects across Egypt, Panama and South Africa: “MCPP has raised more than $11bn from 11 investors and supported 215 projects in 56 countries. These projects are delivering real results around the world.”