A new climate change response fund announced by President Cyril Ramaphosa in the state of the nation address last week is likely to look like the Covid-19 relief fund established during the pandemic to aid businesses.
During a meeting of the Presidential Climate Commission in Johannesburg forestry, fisheries & the environment minister Barbara Creecy said the idea behind the climate change response fund was to set up a mechanism to raise money towards protecting and restoring infrastructure at risk of damage or having been damaged by extreme weather events.
“We know that SA is facing increasing extreme weather events and these are now being handled by disaster mechanisms in provinces and municipalities … we understand that unless we build climate-resilient infrastructure [the funding need] for loss and damage [suffered as a result of extreme weather events] will become a bottomless pit,” Creecy said.
In announcing the fund, Ramaphosa said it would be a collaboration between the government and private sector to “address the persistent effects of global warming, which manifest through persistent floods, fires and droughts”.
The climate change response fund will be directed at climate adaptation efforts including investment in moves that better prepare communities for the effects of climate change.
Creecy said Ramaphosa indicated to her the fund would be supported from government finances but it was also intended to attract other forms of financing from local and global sources, in ways similar to the Covid-19 relief fund.
The Covid-19 relief fund, a package of about R500bn, was spent on unemployment grants, support for small business through a R200bn loan guarantee scheme, farmers and personal protective equipment (PPE).
Cases flagged
About R130bn of the R500bn was funded from the fiscus. The rest was raised from local and global sources including the private sector, the Unemployment Insurance Fund and international finance institutions such as the World Bank.
A 2020 report into the use of the Covid-19 relief fund flagged multiple cases of misuse of funds, including issues such as overpricing in the procurement of PPE and fraud.
PCC commissioners asked Creecy how the government would ensure the climate change response fund did not face a similar fate of misuse and fraud by those in government and the private sector. She said Covid-19 was an “unplanned crisis that we had to respond to as it unfolded”.
“The difficulty during the Covid-19 pandemic was that there was no organised oversight [over how funds were disbursed],” she said. There now was more opportunity to properly organise the climate change response fund and how it will function.
The “government does not have the funds required [to set up the fund] and will need additional sources of funding. To attract additional finance, we have to set up the fund so that there is adequate oversight and access to the fund. People will want to know that the fund is being independently administered and that money is being used for the purposes it was given for,” Creecy said.
The details still had to be decided but it was likely, she said, that either the Development Bank of Southern Africa or the Industrial Development Corporation (IDC) would be responsible for designing and putting the fund into operation.
A report published in 2023 by the PCC on SA’s climate finance landscape reads that from 2019-21, of the R131bn tracked annual climate finance in SA, mitigation finance — money spent to lower greenhouse gas emissions — accounted for 81% of total spending while adaptation finance comprised just 12% at R16bn a year.
According to the report, SA needs to spend about R184bn a year on adaptation until 2030.
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