Africa needs climate finance, and needs it NOW!

Earlier this month, Kenya hosted the the inaugural Africa Climate Summit (ACS), which drew more than than 10,000 participants from Africa and across the globe, to discuss the need for urgent climate action.The Summit saw 20 African Heads of State and Government highlight their countries’ commitments to spearhead initiatives in renewable energy, sustainable land use and innovative climate technologies in the quest to drive low carbon development. Climaxed by the signing of the Nairobi Declaration, the ACS was a renewal of hope, an awakening and depiction of the continent’s optimism about a future that is sustainable and economically viable. 

It was encouraging to note that African countries are committed to undertaking climate action, recognising the potential risks it poses to the continent. But more importantly, African leaders spoke with a single voice in outlining the continent’s needs. They outlined their commitment to implementing climate policies, regulations and incentives to attract local, regional and global green investments. As a result, this would accelerate Africa’s economic growth and job creation potential while at the same time supporting global decarbonisation plans. Similarly, there was an appreciation of the vast opportunities that can be unlocked in the green economy. For example, with critical mineral resources such as graphite and Lithium needed in the production of renewable energy products, African countries have a comparative advantage to take leadership in accelerating the uptake of cleantech. 

At the summit, discussions about climate finance took center stage as African countries used the opportunity to amplify their voices on the need for rich countries to take accountability and fund climate solutions in the South. Africa is the least emitter of carbon emissions in the world, but bears the greatest cost of climate change. Africa accounts for only 2% to 3% of global greenhouse gas emissions. From droughts, floods, mudslides to Tsunamis and a lot more, climate change related disasters are a threat to many people especially those living in vulnerable communities. However, the continent continues to grapple with access to finance to facilitate climate adaptation and resilience. Climate finance remains a major constraint to Africa’s aspirations of a sustainable and resilient future. It is worth noting that rich countries have continued to fail in honoring their pledge of $100bn (£87.5bn) per a year to developing countries in climate finance. Even though some have made efforts to translate climate finance pledges into real project work in developing countries, progress has been slow and minimal. 

If vulnerable African communities are to adapt to the impacts of climate change, climate finance needs to be centered on advancing adaptation strategies and must be provided in the form of grants rather than loans that require later debt repayment. It should exclusively be differentiated from other forms of traditional finance that are often linked to national developmental projects and requiring later debt repayment. Nonetheless, the summit also yielded practical outcomes beyond the usual talk. For example, Germany and USA donated approximately $50 million in new funding contributions to the Sustainable Energy Fund for Africa as part of supporting Africa’s energy transition and renewable energy deployment initiatives. Not only this, the USA donated $30 Million to Support Initiatives under the President’s Emergency Plan for Adaptation and Resilience (PREPARE) in Africa.This would include providing funding to the Africa Adaptation Initiative (AAI) Food Security Accelerator, which will accelerate and scale up private sector investments in climate resilient food security across Africa. 

The use of  carbon markets and pricing as another source of climate finance attracted various opinions. It is argued that through carbon tax revenue and emission trading, African countries can yield climate finance from high carbon emitters who will be liable to climate costs. African countries would channel these funds to catalyze green development.Notably, institutions such as the IMF have previously advocated for the use of carbon prices as the most effective tool to curb carbon emissions globally. It is necessary for African countries to create an enabling environment to help them explore their carbon markets. Countries such as Ghana and South Africa have already existing policies in place but more needs to be done in relation to implementing efficient systems for monitoring and reporting emissions and enforcing the carbon tax to realize its value.

Similarly, there is an urgent need for more engagements centered on the role of the private sector in contributing to Africa’s climate finance gaps. It is more than evident that public sector funding alone cannot extensively cover all investments required for African countries to mitigate and adapt to the climate crisis. Moving forward, COP28 must advocate for the prioritization of mainstreaming climate considerations into private investment decision- making at all levels. Using COP28 as a foundational avenue, African governments must be reminded about the need to de-risk climate finance and create enabling environments and regulatory policies that would attract private funders. For example, attracting private sector investments could be through the use of Nationally Determined Contributions (NDCs) implementation plans that identify specific sector activities and link them to targeted investors.

As the African Centre for a Green Economy, we welcome all solutions geared towards averting the climate crisis. The Inaugural Africa Climate Summit set the right agenda and messaging for African countries as COP28 draws near. We believe the issue of climate finance will be top of the agenda at COP28.