Africa faces unsettling US$250 billion gap in climate adaptation and mitigation financing

By Steve UMIDHA

The continent of Africa is losing millions of livelihoods and lives each year to climate change, and adaptation is urgently needed, a new report is sounding a warning, with Kenya and Ethiopia having been the hardest hit in the region.

 

Uganda on the other hand has recently embraced climate change adaptation with vigor, driving the survey’s choice of these three nations as the focus for The Lemelson Foundation along with the African Venture Philanthropy Alliance (AVPA) who commissioned the report in partnership with Geopoll and WeberShandwick.

“Yet, as these countries seek urgent solutions, the vision of catalytic public sector investment on the continent driving a rush of private sector engagement has failed to materialize,” cautioned the study, arguing that the private finance inflows were far smaller, covering just 0.56 percent of climate finance needs in Ethiopia, for instance.

“The region is in acute need, with 60 million people now in need of urgent humanitarian assistance as a result of droughts, agricultural failures, locust swarms, floods and heat,” it said.

Against this backdrop, the Intergovernmental Panel on Climate Change – a United Nations -led think-tank whose job is to advance scientific knowledge about climate change caused by human activities, has declared that it is now urgent to empower and enable East Africa to develop its own climate solutions.

It also warns that key sectors including agriculture, health and infrastructure were the most affected by the adverse impact of climate change.

The report’s drafters now recommend that the cross-sectoral development of climate adaptation businesses will require specific and relevant solutions to the risk management constraints on the financial sector.

This, they noted, could include advanced knowhow support to prevent business failures, and the generation and broadcast of data demonstrating the potential for relatively secure investments.

“Entrepreneurial support structures in Kenya, Uganda and Ethiopia are creating businesses and skilled managers, but there are only a handful of hubs explicitly focused on climate action, while the support, networks and financing that exist are not organised around addressing problems, such as adapting to climate change,” said the report.

Further adding that, “Securing a far greater scale of engagement around climate solutions will require the integration of a climate adaption lens into existing programmes and sectors, from agriculture to social programmes, as well as an expanded ecosystem providing non-financial support.”

Climate change has gained sharply more attention in recent years as its pace has accelerated and its impacts have become pervasive and more damaging.

Nairobi Declaration on Climate Change and Call to Action

Indeed, African leaders while in Nairobi – Kenya, called for urgent action by developed countries to reduce carbon emissions, proposed a new financing mechanism to restructure Africa’s crippling debt and unlock climate funding.

 

It was part of the continent’s rallying plea during the inaugural Africa Climate Summit held between 4^th and 6^th September, 2023 in Nairobi, stressing the importance of decarbonizing the global economy for equality and shared prosperity.

They called for investment to promote the sustainable use of Africa’s natural assets for the continent’s transition to low carbon development and contribution to global decarbonization.

“We call for a comprehensive and systemic response to the incipient debt crisis outside default frameworks to create the fiscal space that all developing countries need to finance development and climate action,” African leaders said in the Nairobi Declaration on Climate Change and Call to Action, adopted at the conclusion of the Africa Climate Summit.

The leaders expressed concern that many African countries face disproportionate burdens and risks from climate change-related, unpredictable weather events and patterns.

The impacts have included prolonged droughts, devastating floods, wild and forest fires, which cause massive humanitarian crisis with detrimental impacts on economies, health, education, peace and security, among other risks, the leaders said, acknowledging that climate change is the single greatest challenge facing humanity and the single biggest threat to all life on earth.

Underlining that Africa was not historically responsible for global warming, but bore the brunt of its effect, impacting lives, livelihoods, and economies, the leaders emphasized that the continent possessed the potential and the ambition to be a vital component of the global solution to climate change.

But the vital focus on preventing a climate cataclysm through reducing carbon emissions has seen the world’s most vulnerable countries move into climate crises with scant attention to ways of preventing their plight.

This emphasis on carbon-reducing climate emission beside a relative neglect of life-protecting climate adaptation has become a North versus South point of tension, sparking disputes at COP26 and COP27, and now placing the need to ‘correct course’ on adaptation finance firmly onto the COP28 agenda.

The Summit proposed a new financing architecture responsive to Africa’s needs including debt restructuring and relief and the development of a new Global Climate Finance Charter through the United Nations General Assembly and the COP processes by 2025.

The costs could be huge

The Climate Policy Initiative estimated in 2022 that Africa’s climate financing needs were running at $250bn a year and East Africa’s at $82bn.

 

These figures dwarf the $100bn a year pledged by developed nations in 2009 as a total climate investment flow into all the world’s developing nations, yet even that pledge has never yet been achieved. Moreover, public funds are now under added pressure following the Covid 19 pandemic.

The AVPA study is now recommending the creation of an investment-sector as well as a collective website listing all areas where business solutions are needed to address climate impacts in East Africa.

Saying this, will offer crowd-sourced listings of entrepreneurs seeking to engage in climate businesses, and providing a knowledge base on climate businesses under development, as well as pan African insights on innovative business models that could apply in adaptation.

The website for instance, the report is convinced, would aim to ease the difficulty for investors and support networks in identifying potential candidates for support, and mobilise, inspire and facilitate climate adaptation entrepreneurs.

Similarly, an existence of a public-private initiative, the report found, would potentially with organisations such as KenTrade, KenInvest, of Financial Sector Deepening and a firm within the financial or investment ecosystem, produce an annual business risk report on climate adaptation businesses, providing an accurate assessment of the drivers, markers, and levels of business risks for investors in such businesses in East Africa with metrics and comparatives.

“We must respond to the facts. We need to reduce emissions by 43% by 2030 and course correct on adaptation, finance and loss and damage,” warned the report.