Climate financing in Africa refers to the financial assistance offered to African countries to help them address climate change concerns and transition to low-carbon, climate-resilient economies. This money can come from a range of sources, including bilateral and multilateral donors, international financial organizations, private sector investments, and domestic resources.
It also serves a variety of functions, including assisting African nations in executing their nationally determined contributions (NDCs) under the Paris Agreement, which specify their pledges to decrease greenhouse gas emissions and adapt to the effects of climate change. It assists them in developing resilience to climate change impacts such as harsh weather, sea-level rise, and droughts, all of which disproportionately affect the region’s most vulnerable communities.
Climate finance is essential for supporting climate-friendly sustainable development by investing in renewable energy, energy efficiency, sustainable agriculture, and other climate-friendly projects that boost economic growth and reduce poverty. Because developing countries lack finances, it assists them in mobilizing extra money for African climate action, including novel financing methods like climate funds, green bonds, and carbon markets.
Despite recent improvements, there is still a huge financial gap for climate action in Africa compared to available resources. Moussa Faki Mahamat, Chairperson of the African Union (AU) Commission, stated, “We have heard many pledges regarding supporting us to address climate change but promised resources never come. In the meantime, Science tells us that Africa is warming faster than the rest of the world.”
It is true that there are still several obstacles pertaining to climate finance in Africa, which may make it more difficult to carry out projects for sustainable development and climate action. These difficulties may include restricted access to financing since many African countries encounter difficulties obtaining climate funding because of their inability to create bankable projects, their lack of financial resources, and their weak institutional frameworks. This makes it more difficult for them to carry out low-carbon and climate-resilient initiatives.
Furthermore, finance for climate change entails large transaction costs. For African nations, obtaining climate money may be a difficult and drawn-out procedure with expensive transaction fees. This may deter prospective donors and cause a hold-up in the execution of climate projects. The lack of coherence and coordination amongst the various parties participating in climate finance, such as government agencies, development partners, and private sector investors, may be the other most difficult aspect of climate finance. This may lead to dispersed efforts, redundant tasks, and ineffective resource usage.
They are further limited by the fact that many African countries lack the organizational and technical ability required to design, carry out, and successfully monitor climate programs. This may make it more difficult for them to obtain finance, create solid ideas, and guarantee the long-term viability of their investments. Climate-related uncertainty, political instability, and regulatory changes are among the hazards that climate financing initiatives in Africa frequently face. These dangers have the potential to discourage lenders and investors from lending money to local climate projects.
More crucially, climate finance has hampered private-sector participation, despite the fact that private-sector investment is critical to scaling up climate action in Africa. Because there are insufficient incentives and supportive settings to attract private investments. This reduces the ability to use private sector money for climate programs.
According to Kenyan President William Ruto, there is a need to strengthen international financial support and cooperation to mitigate the impact of continental climate change. Apart from strengthened International financial aid cooperation, Africa needs to use the promising progress it is making in technological development to solve the pressure of climate change.
Besides international donor countries and the financial system are also expected to support the strategic development work that Africa is doing due to climate change. The continental green industrialization initiative announced by the Pan-African idea should be further strengthened for renewable energy alternative development cooperation, he emphasized.
AU Agriculture, Rural Development, Blue Economy and Sustainable Environment (ARBE) Commissioner Ambassador Josefa Leonel Correia Sacko in her part noted that climate change is having a major impact on social and economic development in Africa. Hence, to provide a reliable response to the impact of climate change, regional and international agreements and laws should be implemented in an appropriate manner.
Although donor countries and international organizations that support the continent in preventing climate change have not implemented their promises, the African Union is organizing and working on a continental climate finance department that supports the capacity building of its member countries on climate change. She explained that this will help Africa strengthen its financial capacity to combat climate change on a continental scale.
Despite progress in recent years, climate financing is a challenge for African countries. To address this challenge, African governments need to strengthen their domestic policies and institutions, improve access to climate finance, and enhance coordination with international partners to maximize the impact of investments in climate resilience and mitigation efforts.
According to Moussa Faki Mahamat, resources are a key challenge to mitigating climate change in Africa. Therefore, it is time for Africa to look inward to save our people from the impacts of climate change and fund our development pathways. There are multiple transboundary initiatives we can finance with domestic resources, for the benefit of all member states involved especially in the area of renewable energy to address energy poverty and in relation to clean mobility. Africa has what it takes to liberate itself from underdevelopment and the devastating impacts of climate change.
Besides, “let us seize this moment and translate the outcomes of the Africa Climate Summit into concrete actions. Together, we can make a difference and ensure a better future for generations to come and to achieve the Africa We Want”.
In general, African governments, development partners, and other stakeholders must work together to strengthen institutional capacity, improve coordination mechanisms, increase transparency and accountability, and create an environment that is supportive of sustainable investment in climate resilience and mitigation initiatives to address climate finance challenges, including the need for necessary resources. By overcoming these impediments, African countries may fully leverage climate finance to propel sustainable growth and tackle the pressing issues brought about by climate change.
BY EPHREM ANDARGACHEW
THE ETHIOPIAN HERALD WEDNESDAY 21 FEBRUARY 2024
