Description

Project-specific barriers are project characteristics that limit the project’s effectiveness in achieving adaptation goals. They include:

Lack of project pipeline: Complexity of project due diligence results from many private sector actors, including institutional investors, have largely avoided financing adaptation projects in the region due to cost recovery challenges and the complexity of the technical due diligence.

Risk of negative social impact: The majority of Sub-Saharan African countries have underdeveloped capital markets, meaning the only viable option for financing infrastructure projects is through foreign currencies such as the dollar or euro.

Siloed approaches where multi-sectoral, cross boundary solutions are needed: There can be significant licensing barriers and lengthy project development cycles which are even more relevant for projects that also require proof of adaptation and reduce the pool of financeable projects. Multiple rounds of financing for complicated infrastructure increase costs and time to develop.

Variability of climatic conditions within a single project: Given the long lifespan of some infrastructure, it is critical to base expansions and new infrastructure investments on future climate projections. However, uncertainties around climate projections and the magnitude of associated revenue losses contribute to the lower risk perception of decision-makers. Moreover, decision-makers are not incentivized to make upfront capital investments as the benefits of resilience measures accrue over several years or decades.