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Papua New Guinea
Home to 80 percent of the Pacific Islands’ population and one of the world’s most important biodiversity refuges, Papua New Guinea is a key partner for AFD Group. This partnership, focused on climate and biodiversity, is gaining momentum, with a first bilateral agreement signed in July 2023 and over €50 million committed by the end of 2024 in areas such as energy transition, greening of port infrastructure, and green finance. Expertise France, followed by AFD in 2024, has established operational offices in the country.
Context
Located north of Australia, Papua New Guinea is the largest, most populous country in the Pacific, with 9 million inhabitants on a territory of 462,840 km2.
Comprising the eastern half of the island of New Guinea, the Bismarck Archipelago, Bougainville Island, and numerous smaller islands, Papua New Guinea features great geographical and cultural diversity. There are almost 850 indigenous languages and an even greater number of clans, many of which live in isolated regions (85% of the population live in rural areas).
What's more, forests, which make up 78% of the country, are a vital source of food security for many inhabitants and an essential part of the country's cultural, linguistic, and spiritual make-up.
Economically, Papua New Guinea is classified as a lower-middle-income country with a GDP of around 24.7 billion dollars in 2020. But it has the highest level of income inequality in the Asia-Pacific region and ranks 155th in the world in the 2019 UN Human Development Index.
The country is highly exposed to natural and climate risks: in 2021, it ranked 9th out of 181 countries on the World Risk Index.
With a commitment to operate in Papua New Guinea since 2018, AFD Group supports the country in its sustainable development objectives and in the fight against climate change. A renewed commitment during French President Emmanuel Macron's visit in July 2023.
The Group's action in the country, which is in line with the country's major development challenges and the Pacific Islands Forum's (PIF) 2050 strategy for the Blue Pacific, focuses on the following five areas:
- management and resilience of marine and coastal ecosystems
- forest protection
- development and greening of financial systems
- green port infrastructure
- energy transition
Until now, AFD has only provided grants for regional projects and specific grant tools (FEXTE). However, lending activities are set to expand in the years ahead.
AFD's activities in Papua New Guinea are overseen by the Pacific Ocean Regional Office.
Our approach
"AFD GROUP AND PAPUA NEW GUINEA: STRENGTHENING CLIMATE RESILIENCE"
Papua New Guinea is one of 18 Pacific island states and territories covered by the Kiwa Initiative, which supports projects focusing on Nature-based Solutions to enhance adaptation to the effects of climate change. The country has several projects in the pipeline:
- The regional project "Nature-based solutions in Melanesian watersheds to generate co-benefits for climate resilience, biodiversity, health and well-being (Wish+)". Supported by Wildlife Conservation Society (WCS), the project aims to promote the safe management of drinking water, sanitation, and wastewater in the central forest of Manus Island.
- Three local projects led by civil society organizations are also being implemented, including one launched in 2023 by KGWan Eco Habitat Inc. This initiative aims to improve livelihoods through biodiversity conservation and sustainable climate systems in the mountainous Simbu region.
- In 2025, two additional projects were added to the list: one led by Dikasuna Nature Conservation (Inc) and another by KUP Reforestation.
Papua New Guinea is home to the third largest primary forest in the world, and the national government has made its protection, along with the promotion of greener social and economic development, a priority.
AFD supports forest and marine biodiversity conservation through its SoNG project (Solwara Na Graun blo Pipol), which includes the following components:
- Achieving 30 percent of land and marine areas under protection by 2030, by supporting community and civil society initiatives to develop sustainable agriculture and fisheries value chains. This project will be implemented by the NGO Wildlife Conservation Society and Expertise France.
- Integrating conservation into the implementation of public policies and ensuring alignment with local initiatives.
- Promoting training and research to recognize, preserve, and share traditional knowledge and cultural practices.
- Strengthening the Climate and Biodiversity Fund (FCB) to support conservation and the fight against climate change.
In addition, the European Union has entrusted Expertise France with implementing the €33.5 million Forest, Climate and Biodiversity Protection Program (FCCB).
Together, these two projects reflect the strong engagement of the Team Europe approach in supporting the country’s efforts in this field.
In July 2023, Agence Française de Développement (AFD) signed a letter of intent with the Global Green Growth Institute (GGGI) and the Bank of Papua New Guinea. The aim was to support the establishment of a green finance center in Papua New Guinea by providing tools to national financial actors to encourage their involvement in the ecological and energy transition.
In March 2024, AFD signed a €6 million grant agreement with GGGI, comprising both a regional component and one specifically dedicated to Papua New Guinea.
AFD is working closely with GGGI and commercial banks to develop concrete solutions such as interest rate reduction facilities and guarantee funds to secure loans that incentivize the private sector to invest in green projects related to renewable energy, carbon emissions reduction, and the sustainable management of natural resources.
This initiative aims to support island states in coping with the severe economic costs of natural disasters, equivalent to 5% of the region’s GDP per year, or US$1 billion, enhance the integration of regional financial systems into sustainable development frameworks, and mobilize private sector investment for climate finance.
The Port of Rabaul, the fifth-largest port in Papua New Guinea and the only international port in East New Britain Province, has suffered severe infrastructure degradation due to the accumulation of volcanic ash, making it increasingly vulnerable to the impacts of climate change. Upgrading its infrastructure and improving environmental management are essential to ensure the sustainability of port operations and protect local natural resources and biodiversity.
The Rabaul Port infrastructure rehabilitation project is valued at over €80 million. It includes financing for two wharves and their extension, a storage facility, and a fish processing unit primarily for export. The project will also implement AFD’s Green Port mechanism to support climate adaptation and mitigation, focusing on waste and wastewater management, greenhouse gas emissions, and the resilience of the port infrastructure itself.
The project is co-financed by Agence Française de Développement (AFD) and the European Investment Bank (EIB), through two loans of €24 million each, along with a €16.6 million European Union grant delegated to AFD.
In 2022, around 20% of the population of Papua New Guinea had access to electricity. The country remains heavily dependent on fossil fuels, which account for 70% of its energy mix.
In July 2023, Agence Française de Développement (AFD) signed its first financing agreement to support the country's energy transition. This technical cooperation brings together AFD, the New Caledonian public energy company Enercal, and the Papua New Guinean company PNG Power Limited. It aims to support the integration of renewable energy into the national electricity grid by drawing on New Caledonian expertise.
In the field
News & Press Releases
AFD Group in Papua New Guinea: Boosting Biodiversity Protection to help Island States Cope with Climate Change
With the opening of its Expertise France subsidiary in Papua New Guinea and AFD's first bilateral agreement with the country, AFD Group signals its commitment to the preservation of forests, biodivers...
Publications & Media
Key figures
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5 AFD Group projects ongoing from 2024-2026
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Over €50 M in financing in 2024