There is an abundance of private capital available in local debt capital markets, but these funds are not typically invested in infrastructure-related adaptation projects. A recent Intellidex report (link): , however, indicates that that demand is growing. Water-based solutions are now considered the highest priority sector for pension funds. Climate Adaptation Notes is the first instrument to address water scarcity in Southern Africa by streamlining adaptation project financing into a single instrument through a partnership between commercial banks and institutional investors. Climate Adaptation Notes aims to increase the flow of funding into water and wastewater adaptation projects by combining construction financing and post-construction refinancing phases into a single instrument. Following a pilot issuance of USD 125M targeting projects in Botswana, Eswatini, Lesotho, Namibia and South Africa, it seems possible that, at scale, Climate Adaptation Notes could generate tens of millions of additional cubic meters of safely treated water and wastewater and could benefit hundreds of thousands of households facing water shortages and sanitation challenges.


Botswana, Eswatini, Lesotho, Namibia and South Africa


Sub-Saharan Africa


Climate Adaptation Notes (CAN)

Instrument category

Debt financing

Secondary instruments

Competitive finance or concessional loan

Project size (range)

USD 50-100M

Project size (details)

USD 125M for initial pilot, scale up to approximately USD 7.8B


GFA Climate & Infrastructure and Renewable by Nature

Year of financial closure



Infrastructure project developers in water and wastewater sector

Primary financer

Commercial banks (construction finance)

Other co-financers

Foundations and other Donors, Project Developers, DFIs and institutional investors

Other contributors

CPI Innovation Lab

Other transaction participants


Barriers addressed

Climate Adaptation Notes aims to increase the flow of funding into water and wastewater adaptation projects by combining construction financing and post-construction refinancing phases into a single instrument.

Combining short-term construction financing from commercial banks with long-term post-construction refinancing allows long-term funders to leverage the commercial banks’ construction project expertise, mitigating project performance risk and enabling investment in sectors previously seen as too risky by institutional investors. This new approach also reduces the time and cost involved in financing such projects and would enable climate adaptation projects to tap into the nearly USD 550B US domestic institutional savings pool in the region.

Financing structure

Climate Adaptation Notes works through a three-stage process, implemented through an independently managed and regulated Debt Capital Markets platform. In Stage 1, the Platform manager works predominantly with local commercial banks to identify and screen suitable projects. Criteria for selection include commercial viability and adaptation criteria to ensure projects reduce climate-related risk. Once selected, these projects are marketed to institutional investors and DFIs, and no funding occurs. Instead, the Notes represent a commitment to refinance the commercial bank construction loans after each project’s commercial operation date. In Stage 2, commercial banks provide short-term construction loans. The commitment of the Notes allows the banks to offer more competitive loan pricing, as they have a responsibility for refinancing and are therefore not subject to the capital costs imposed on commercial banks under Basel III for longer-term funding. In Stage 3, after projects reach commercial operation, the Notes are funded. The proceeds are used to repay the short-term construction loans. The long-term investors assume the credit risk, and the projects benefit from the more favourable terms of the Notes.

Suitability for cities in low-and-middle income countries (detail)

Yes. CAN is being implemented in the Southern African Customs Union, with plans to expand to the Southern African Development Community (SADC) region and then to the rest of Sub-Saharan Africa.


The Lab. (2020) Climate Adaptation. The Global Innovation Lab for Climate Finance.


Cervigni, R. et al. (2015) Enhancing the Climate Resilience of Africa's Infrastructure. United Nations Economic Commission for Africa.


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