Investors eye market opportunities as Africa faces billions in El Niño losses

By Nympha Chinenye Ozougwu

As warnings mount over the devastating impacts of a potentially severe El Niño, a Barclays research note has come under scrutiny for highlighting the event’s potential upside for investors.

In a note to clients reported by The Bureau of Investigative Journalism, the bank described a very strong El Niño as a source of market dispersion creating opportunities for investors to profit from shifts in weather sensitive commodities and financial markets.

The climate shock is expected to worsen an already dire food crisis. Estimates cited by the Famine Early Warning Systems Network suggest that up to 125 million people could require urgent food assistance by December, with Sudan, South Sudan and Somalia among the countries at greatest risk of famine.

The economic fallout is expected to be significant, with an estimate from the African Development Bank suggesting that countries hardest hit by the El Niño driven crisis could face economic losses of between $10 billion and $20 billion. Anthony Nyong, the bank’s director for climate change and green growth, warned that the shock could reduce GDP by an average of 1% to 2% in the most affected nations.

The contrast between these projections and Barclays’ focus on potential market opportunities has provoked political backlash. Green Party MP Adrian Ramsay accused the bank of turning a climate driven humanitarian disaster into a financial opportunity.

“It is grotesque that Barclays, having pumped billions into coal, oil and gas expansion, is now looking at a global food crisis being deepened by climate breakdown and seeing a trading opportunity,” Ramsay said.

The controversy has also prompted renewed calls by Green Party campaigners for customers to vote with their feet by switching banks. Green Party campaigners argue that Barclays’ continued financing of fossil fuel expansion raises fundamental questions about whether major financial institutions are helping tackle the climate crisis or profiting from the escalating risks it creates.

Their criticism is backed by data from Banking on Climate Chaos, which identifies Barclays as Europe’s largest financier of fossil fuel expansion despite the bank’s public climate commitments.

Barclays has rejected suggestions that its research sought to profit from human suffering. Responding to reporting by The Bureau of Investigative Journalism, a spokesperson said the analysis was intended to assess potential risks and market impacts for investors.

“Any suggestion that Barclays seeks to benefit from human suffering is wrong,” the spokesperson said. “Barclays recognizes that climate change and extreme weather events can have serious consequences for communities around the world.”

The bank added that it provides independent market analysis and that its research does not make moral judgments on El Niño, climate change or food security issues. It assesses the potential impact of these developments on markets.

For OPA News Agency