climate finance

Why does Africa receive only 11% of the climate finance it needs?

A new report released by the Climate Policy Initiative finds that the total annual flows of climate finance in Africa for 2020, did not exceed $30 billion, or just 11% of its needs, out of the $277 billion needed annually to meet the continent’s climate goals by 2030.

The report, entitled “Climate Finance in Africa”, called for an increase in funding for adaptation actions in Africa by 6 times the current funding, and mitigation by 13 times.

It monitored global climate finance flows from the public and private sectors on the continent, and found that the private sector contributed only about 14% of the total financing, which it described as a “very low percentage,” but what is distinctive this time is that Africa has achieved a better balance between investment in mitigation and adaptation by 49% and 39%, respectively. As for financing dual benefits, it achieved 12% of the total financing, which means supporting projects targeting development and climate action at the same time.

“Our identification of Africa’s climate finance needs was based on the NDC reports submitted by African countries, and other national reports such as biennial update reports and national communications, and adaptation plans,” says Chafee Mittel, senior analyst at the Climate Policy Initiative and lead author of the report – National, Long-Term Strategies and Adaptation Communications – published since 2016.

He continued, during an e-mail interview, that the share of adaptation financing increased in 2020 compared to 2019, and this is an encouraging trend in light of Africa’s urgent need for more adaptation financing, adding that the Climate Policy Initiative estimates that the continent needs 277 billion US$ per year to implement NDCs and achieve the 2030 climate goals, but there is a large gap between reality and what is required, and the real gap is likely to be larger because countries often do not estimate their financial needs well, especially with regard to adaptation, due to the lack of sufficient data.

He said that one of the most important issues that the Climate Policy Initiative aims to discuss at the upcoming climate conference to be held in Egypt is working to increase funding for adaptation and resilience in the face of climate change, and to ensure that climate finance pledges are converted into actions, because delaying work on increasing climate finance will be costly for the continent.

In the future, noting that the social, economic and environmental benefits of climate finance investments far outweigh the costs of their implementation, for example, mitigation and adaptation investments will shift increasing costs into new sources of revenue; pre-investment in climate resilience will reduce rebuilding costs by 25%.

He added that so far, debt represents more than half of climate finance, which increases the burdens of other debt-burdened African countries as well, which they incurred due to ongoing crises such as the Covid-19 pandemic and food insecurity, so it is important for financiers to commit to providing soft finance to sectors that need to transition to sustainability. Such as industry and urban infrastructure, support projects aimed at preserving natural capital and biodiversity, that is, financing strategies must be adapted to suit the current reality of the debt-ridden African continent.

Mittel called for more incentivising of private finance, working to provide the data needed to convert NDCs into clear climate finance strategies, and using the Climate Budget Numbering tool, a tool for monitoring and tracking climate-related expenditures in the national budget system, and helping to allocate budgets toward climate-friendly activities. Reorienting them away from carbon-intensive budgets, commenting: “This is necessary because climate information is important to investors, and stakeholders need to see an analysis of climate risk in the proposals, and also help track progress in translating net zero pledges into tangible targets and flows.”

Hesham Issa, a member of the Union of Arab Environmental Experts and the former Egyptian focal point for the United Nations Framework Convention on Climate Change, did not disagree with this perspective. He said that the percentage of funding reached by the report is “very small and does not keep pace with ambitions,” and Africa does not get its sufficient needs from climate finance since the pledge of $100 billion from developed to developing countries at the Copenhagen Summit in 2009.

He added, “This was the first pledge that has not been fully fulfilled so far, and after that, Article 9 of the Paris Agreement in 2015 stipulated that developed countries are committed to providing climate finance, but it is a political and non-binding pledge, and they may be subject to a country that does not meet its funding obligations… It can be said that it is a morally binding undertaking.”

He added that the most prominent challenges that impede African countries in obtaining sufficient funding for mitigation and adaptation needs are the insufficiency of climate finance provided by developed countries so far, and the lack of technical capabilities that impede access to climate finance on the conditions set by developed countries, most notably the projects’ compliance with environmental and social standards.

The third reason is the existence of a severe economic crisis as a result of the Ukrainian-Russian war, which has burdened the economies of the developed countries with huge sums, as well as the negative effects of the pandemic on the whole world.

He added that the developed countries themselves are suffering from great losses

Because of climate change impacts, such as forest fires or drying up of rivers, desertification and rising temperatures, all of which have affected the amount of climate finance that it can provide as it is trying at the same time to repair the damage it has done.

In the same context, he said that Egypt committed itself, in the Nationally Determined Contributions plan, which it submitted several months ago, to reducing emissions in key sectors such as electricity, oil, and transportation, all of which are transformations related to the availability of funding, and suggested formulating a clear strategy for coordination between the authorities within the state such as the government, the private sector and community organizations.

He added that donor countries must allocate a specific number of their GDP to climate finance, thus ensuring the existence of sustainable funding sources, and that the part allocated to financing adaptation projects should be in the form of “grants” because some adaptation projects are financially costly and have no material return. Financing allocated to reduce emissions can be in the form of loans, and grants should be launched to support the technical capabilities of developing countries to request financing.

On the other hand, Heik Hein, Head of the Department for Climate, Energy and Environment at the German Federal Ministry for Economic Cooperation and Development, commented on the CPI report that Germany recognizes the very high financing needs of African countries to translate their NDC plans into action, and that there is a gap In financing between what is required and what is actually being pumped.

She continued in an interview: “Public and private financing are equally important to meet the needs of climate finance in Africa, and we need to do more to enhance the flow of these funds, especially since the African continent has high potential for mitigation measures such as investing in clean energy.” At the same time, some regions are highly vulnerable to the effects of climate change.

She said that in recent years, the German Federal Ministry for Economic Cooperation and Development has provided about a third of its annual climate finance to African countries making Africa the main beneficiary region, commenting: “We are committed to continuing and increasing this support, balancing mitigation and adaptation, and working on bilateral partnerships, in the field of climate and development with some African countries such as “Rwanda,” in areas such as waste management, circular economy, renewable energies, and sustainable urban development.”

On a question about the challenges faced by funded donors to provide climate finance to African countries, Hayek said that many African countries have high development needs in important sectors, and competition for limited financial resources occurs, and because of this, climate change financing may not always be a top priority. Therefore, it is necessary to design activities that target development needs and achieve mitigation and adaptation at the same time.

She added that the countries that provide climate finance need a clear policy and strategy from the recipient governments on climate action, because this clarifies the most priority sectors to pump funding into, and direct more targeted and comprehensive financing packages, while supporting the technical capabilities of countries to benefit from investments from various actors.

She said, “This is happening for example in the multilateral partnership in South Africa, where Germany is investing with France, the United States, the United Kingdom and the European Union in the renewable energy sector in South Africa and is supporting the phase-out of coal, creating new jobs for people who used to work in the coal industry.” “.

She pointed out that among the obstacles is the long time required to develop and formulate sustainable and “financeable” projects that are commensurate with national policies and implementation capabilities, in addition to the challenge of attracting more private investment on the continent, so the concerned parties must be supported such as ministries of finance, central banks and banks. National development to increase its access to green finance.

“Debt is also a major challenge for many African countries, and this requires joint international action and firm measures from partner countries to stabilize budgets and attract new loans for urgent infrastructure development,” she added.

She added that globally, funding for adaptation remains below mitigation, and this is not commensurate with the needs of African countries, commenting: “Germany is a member of the ‘Champions of Adaptation Finance’, and is working with partners to achieve the goal set out in the Glasgow Climate Charter to double the financing of adaptation.

This story was originally published in The Scientific American, with the support of Climate Tracker’s COP27 Climate Justice Journalism Fellowship.

Hadeer El-hadary
Hadeer El-hadary is a freelance Egyptian journalist. She’s written for Egyptian and Arab websites such as Scientific American, Vice Arabia, and Shorouk News. Her work focuses on the topics of environment, climate change, science, health and women’s rights. She’s won an award from the Egyptian Journalists Syndicate for an environmental story about converting date palm seeds into fuel and other products, and another award from Plan International organization and the Ministry of Social Solidarity for a story about discrimination against women in job interviews.