Sustainability financing gap threatens Ghana's SDG targets – Experts

Experts have raised grave concerns about the significant financing gap undermining Ghana’s efforts to achieve the UN Sustainable Development Goals (SDGs) by 2030.

Globally, the SDG financing gap is substantial. After the outbreak of COVID-19, the gap to reach the SDGs in developing countries increased by 56 percent, totalling approximately US$3.9trillion in 2020. Before the pandemic, the annual SDG financing gap in developing countries was estimated at around US$2.5trillion.

“We are significantly behind, and we need to do more. There is a 90 percent climate financing gap in the case of Ghana, where so far it’s only about US$830million that has been mobilised,” stated Kwame Banieh, Partner at KPMG, at the Sustainability Conference held during the PROPAK Ghana 2024 exhibition.

“It’s deeply worrying as we are only about five years away from the 2030 target for the SDGs which, we as a country, must attain,” he added.

Mr. Banieh noted that while sustainability has become part of the national agenda – demonstrating commitment, more concrete action is required to attract the necessary financing to support the SDGs. “The truth is that we are significantly behind, and we need to do more,” he reiterated.

Highlighting some of the barriers, Mr. Banieh pointed to the focus on traditional financing, lack of domestic investors, weak legislation around green initiatives, capability gaps in understanding sustainability risks and opportunities, and perceived high risks of green infrastructure investments. “If you are not ready with environmental, social and governance (ESG) or sustainable finance in your business, you are carrying a major risk,” Mr. Banieh warned. “Very quickly, when the regulators act, you will have to adopt these principles.”

However, he outlined the compelling business case, including access to capital, reduced climate risk exposure, enhanced operational resilience and competitive advantage. “There is evidence that businesses compliant with ESG principles are selling more. Companies prefer to do business with ESG-compliant organisations and offer better terms,” Mr. Banieh said.

Ms. Dzifa Amegashie, Head of Corporate and Investor Relations at CalBank, shared how the bank has prioritised gender equality, renewable energy and industrial innovation under its ESG strategy. “Our policies and products are geared toward those three SDGs for this strategic period, though the strategy evolves as we make progress,” she explained.

CalBank has secured US$32million specifically for lending toward these sustainable priorities. “We’ve collaborated with development finance institutions to support sustainable financing in these areas. We’re lending to women, green energy projects and so on,” said Ms. Amegashie. However, she noted that disbursements slowed during COVID-19 but are gradually picking up as awareness grows.

She emphasised the importance of technical assistance, concessionary financing and risk-sharing tools like credit guarantee schemes to facilitate sustainable lending, especially for SMEs. “Central to banking is risk management. We must be able to return investors’ money, so we need innovative ways to finance promising sustainability projects that may not meet traditional criteria,” the banker stated.

Kwadwo Kwakye Gyan, Head of Risk at the Ghana Infrastructure Investment Fund (GIF), revealed that the fund has raised US$160million, including US$85million from AFD (French Development Agency) and US$75million from the African Development Bank, with a portion earmarked for climate-related projects.

“It’s mainly about the management, corporate governance and how far we’ve taken this ESG issue. We believe for the institution to thrive, we shouldn’t just be looking at doing projects but considering how they will benefit future generations,” Mr. Gyan explained, underscoring GIIF’s long-term, sustainable approach to infrastructure development.

While Gyan acknowledged that multinationals are making significant ESG strides due to parent company requirements, he emphasised that more needs to be done across all sectors to bridge the sustainability financing gap and keep Ghana’s sustainable development goals within reach.