DLA Piper drafts Model Law to unlock funding for African climate projects

DLA Piper, in collaboration with the African Green Infrastructure Investment Bank (AfGIIB), Africa investor (Ai) and the CFA Asset Owners Council (AoC), has today launched the Model Law on Institutional Investor-Public Partnerships (ML-IIPP) initiative, which will facilitate the deployment of trillions of dollars of private capital into ‘green’ infrastructure programmes and projects across the continent.

At COP26, the current legal and regulatory frameworks of Africa and other emerging markets were stated as a key investment barrier by global and domestic institutional investors that represent over USD150tn. To address this hurdle, DLA Piper designed the ML-IIPP, a 130-page document that delivers the fast tracking, de-risking and scaling of private capital participation in ‘green’ infrastructure investment programmes and ’green’ infrastructure projects through the formation of Institutional Investor-Public Partnerships (IIPPs) across Africa and the implementation of the concept of Early Investor Involvement. The ML-IIPP is available via the DLA Piper website to governments who wish to implement the ML-IIPP into their statutory framework and institutional investors who want to invest in these projects.

The ML-IIPP was written and informed through extensive stakeholder engagement, to understand the particular challenges and objectives that needed to be addressed, together with the lessons learned from previous projects. Stakeholders included representatives from the public sector, the development finance community, domestic and global investors, and consultancies advising these entities.

The International Energy Agency (IEA) has highlighted that fostering the financial conditions for a rapid deployment of clean energy in Africa, is one of the defining challenges of our times and that the creation of new legal and regulatory frameworks will help tackle many cross-cutting issues to enable the mobilisation and deployment of private capital at scale and at speed. This need is great. Africa is required to mobilise USD3tn in order to meet its Nationally Determined Contribution (NDC) projects by 2030. Put into context, the whole world has only managed to mobilise USD2.8tn for renewable energy investments over the past 20 years, with Africa only receiving 2% of that global sum.

Dr. Sharon Fitzgerald, partner at DLA Piper and one of the authors of the Model Law, commented: “The environmental challenges facing African countries are immense. The continent needs to mobilise more climate finance and investment in the next eight years, than the entire world has managed over the past twenty years. It is against this backdrop that DLA Piper, alongside its valued partners, are excited to introduce a Model Law that will hopefully go some way to addressing these challenges. It will enable the use of a newly designed regulatory framework that will support and encourage governments and global institutional investors to work together to deliver ‘green’ infrastructure investment programmes and ’green’ infrastructure projects which will facilitate the delivery of African countries NDC commitments, to the ultimate benefit of us all.”

Dr. Hubert Danso, Chairman of the African Green Infrastructure Investment Bank (AfGIIB), added: “We are delighted to be partnering with DLA Piper on this innovative Model Law initiative. It has met its overarching goal of designing greater public-private finance mandate alignment and fostering more catalytic private investment pathways, that fast track, de-risk and scale private capital participation in African NDC and green infrastructure investments, implemented through Institutional Investor-Public Partnerships (IIPPs).”