According to the World Coffee Research report, by 2050, the demand for coffee would have doubled, but the suitable land to grow it on, would be cut in half. You would perhaps wonder why I start with this coffee statistic. Here is why.
One of the first string of stories I heard of Ethiopia growing up, was how much of an independent African country it was, free from the shackles of colonialism that most African countries had endured at one point or the other in their national history, the battle of Adawa, and the resilient nature of this Sub-Saharan African country. Alongside that story always came the story of coffee, how Ethiopia was the world’s coffee hub, how the finest and truest of coffee, unadulterated, could be found in Ethiopia. And I found this to be a truism on my visit in 2012 to Addis. This peculiar country has grown to become a cornerstone of international politics and effort for African and World unity, and the poster boy of the United Nations in Africa as well as a country that still has the agricultural sector as its prime sector. It is then hard to deny the enormous potential of this sprawling 1.1 million km2 nation.
Traditional coffee ceremony, Ethiopia © DPU University College – Flickr Creative Commons
Yet, reading the country’s detailed US$100 million proposal to the Green Climate Fund for Climate financing, I found in the opening statement of the Executive Summary a line that tugged at my being. It read, ‘Currently, a worsening drought is threatening one-tenth of the country’s population (c.f 10.3 million people) with catastrophic drought shortages.’ This statistic is staggering. It is even more heart-rending because Ethiopia’s proposal to the Green Climate Fund was rejected.
Ethiopia suffered a terrible drought in 2003 that affected its agriculture, especially in the area of coffee production. With an understanding that Ethiopia’s economy is agriculture-based and that agriculture represents 45% of its GDP, 85% of its employment and 90% of its foreign exchange earnings, the drought definitely took a major toll on the country’s economy its jobs, people’s livelihood, increased its poverty rate, devastated peasant farmers and generally torpedoed a developing economy.
Researchers and analysts have it that another drought is looming, something even worse than 2003. Would it not then be foolhardy to stand by and watch another drought envelope this developing economy and steal from it all the benefits of its rebounding in the past fourteen years? Should we allow climate change hold back economic progress, reverse development and exacerbate social and economic problems in the country? Climate financing for Ethiopia is critical now more than ever.
Ethiopia is the world’s fifth largest producer of coffee and Africa’s largest exporter. This means, coffee is a major chunk of the agricultural benefits that are the mainstay of the country’s economy. Climate change is affecting the coffee produce already, and there are predictions that the future for it is bleak if there is no major climate finance to cushion the effects and allow for mitigation, adaptation and preparation for what lies ahead. The intensity of drought and flooding has affected households, peasant and industrial farmers and even the institutions supporting various aspects of the economy. Currently 5.6 million Ethiopians are on food aid. The low level of economic development combined with an agriculture heavily dependent on rainfall put the country at the receiving end of the adverse effects of climate change.
The statistics go on and on. Climate change would wipe out more than half of Ethiopia’s coffee production if nothing is done. Over the past few decade, farmers have seen less rain and more of dry seasons and are constantly inundated with news of an impending major drought ahead. It has even been forecasted that Harar, one of the country’s major coffee regions, is likely to disappear before the end of the century at this rate. There is a potential to preserve most of the agricultural produce by migrating to higher lands and using climate technology, but this requires a lot of effort and resources which needs heavy levels of financing, which the country cannot afford at the moment.
The essence of the Green Climate Fund (GCF), an offshoot of Paris in 2015, is to channel funds to help poor countries tackle climate change. Does Ethiopia then not fall within this sphere? The GCF needs to understand that at this point, climate financing needs to reach those who need it most- the poor, the developing nations, nations that survive on agriculture, because climate change is hitting food production hard and the world needs food to survive. It is sad that at the last approval of US$855 million in climate funds, none was allocated to the least developed countries, those that need it most. Karen Orenstein, climate finance specialist with Friends of the Earth, US enthused at the Board meeting of the Fund in South Korea that‘The ones who benefit most from adaptation are the most vulnerable, the most marginalised, the poorest – and in my opinion, those are the people who should be at the heart of the Green Climate Fund.’ It is then worrying how the Fund displays an ideological preference for large scale infrastructure projects, rather than ones that build resilience within communities.
However, while we clamor for the GCF to grant funds to aid Ethiopia in its $7.5 billion annual CRGE target foray and head for an audacious middle income status and green economy by 2025, we must also be pragmatic, and prepare alternatives. We must take an inward look into the aid that can be deployed from within Africa as well as within Ethiopia, because truth be told, Africa has to begin to find alternative and innovative ways to finance its own climate strategies.
What I would consider the first challenge is the world’s shorter political and economic cycles. Listed companies on the stock exchange report on quarterly basis and legislative regimes run for four years, while the climate response involves a coalesced, coordinated and long term effort, spanning decades. This problem must first be solved by implementing long-term initiatives supported by various regimes of government, irrespective of party and ideology, as well as a firm political will to finance a green economy.
Secondly, private sector investment must be encouraged in order to fund climate resilience. This is because, as can be seen already, government does not have the fiscal infrastructure to fund the CRGE target, thus by pooling funds of the private sector through encouraging climate investment, Ethiopia –and even the rest of Africa- can raise its own financing for climate. This is even more possible when one considers the heavy investments made by foreign companies in Africa annually. So why don’t we divert these investments to funding and financing climate activities?
Third, and this very closely follows the second, the government needs to, working hand in hand with the private sector and civil society organisations, make data available- investment data. For investors to put their money in any market, there needs to be investor confidence. This data means that the financial and business sectors are properly informed of the relevant climate-related investment risks. This requires scientifically grounded data. If data is made available, there can be a proper portending of the market and investors, by knowing the odds of their investments, can confidently make climate-related investments. Also, with Ethiopia being one of the world’s fastest growing economies (the IMF research has shown that out of all the countries with over 10 million population, only India and China will grow at a faster rate), all it needs to do is enhance its ease of doing business indices in order to aid more investments.
Finally, I propose a Green Bond for Ethiopia. Climate Policy Initiative (CPI) analysis has estimated that approximately USD 2.2 billion of total flows in the green bond market have been directed towards cities in developing countries since 2012. Thus, there is a viable market for green bonds, if not internationally, at least municipally and in the region. South Africa proves to be a worthy example. Green bonds are a big way for capital market mechanisms to enlist private fund to finance climate resilience, because if we do not want coffee to go extinct, we cannot wait for the GCF.
Originally published at Tunza Eco Generation