The past two weeks have seen two important climate change forums playing out on the continent in the build-up to COP27 in Egypt in November. The first was the Botswana Global Adaptation Week, from August 22 to 26, and the second was last week’s Africa Climate Week held in Gabon.
Unsurprisingly, the topic on everyone’s lips at both events was climate finance, specifically how to access more grants to fill the ever-widening gap between demand and supply. Indeed, the opening session of Africa Climate Week featured a ministerial dialogue on the challenges of mobilising and accessing climate finance to drive the implementation of countries’ nationally determined contributions and national adaptation plans.
I do have a great deal of sympathy for the perspective that, given Africa’s minuscule historical responsibility for creating climate crises in the first place, the onus should fall on developed countries to pay for the mess they created. I also firmly believe developed nations should, at a bare minimum, make good on their pledge to provide $100bn a year in climate finance. However, I also think African countries need a serious reality check on this front.
A report from the Climate Policy Initiative in December 2021 found that while global climate finance flows have increased over the past decade, the increase in annual climate finance flows between 2017/2018 and 2019/2020 was only 10%, compared to an increase of 24% in previous periods. Moreover, grants accounted for a meagre 6% ($36bn) of 2019/2020 global climate finance, inching up only 1% from the previous assessed financial year of 2017/2018.
It should then hardly come as a surprise that recent reports on the state of the $8.5bn climate finance investment intended for SA’s just energy transition made by the US, the EU and Britain at COP26 in 2021, indicate that as much as 80% of that $8.5bn on will be in the form of “soft” loans.
This is a worrying trend for two main reasons. The first is that in the scramble for grants African countries are allowing lenders to determine the priorities for the spending of grant funds, which is often at odds with where the needs are.
Funding gap
Despite African countries accounting for less than 5% of total global greenhouse gas (GHG) emissions, and having identified adaptation as the largest funding gap, only 2% of total global climate finance flowed to projects that reduce both climate vulnerability and GHG emissions. For Sub-Saharan Africa, two-thirds of this dual-benefit climate finance went into “other & cross-sectoral” projects, while only a third went to water supply, flood protection and climate resilient agriculture, where the funding gap is greatest and the risks most acute.
The second major problem with this international grant-dependent mindset is that it runs against the grain of the rest of the world. In fact, in the 2019/2020 financial year three-quarters of tracked climate investments ($479bn) flowed domestically, not internationally. Moreover, at the global level almost 60% of climate projects funded domestically were from private sources, whereas in Sub-Saharan Africa only 10% came from private sources. This indicates poorly articulated national adaptation goals and the lack of clearly identified tangible investments in climate-vulnerable sectors.
African governments, including our own, need to urgently get with the programme and start engaging the private sector to identify investable opportunities to insulate their economies from the increasingly apparent physical risks of climate change. One key initiative towards this end is the upcoming three-part series of events organised by the National Business Initiative and African Climate Foundation to engage business and decision-makers, building on Africa Climate Week.
These vital engagements aim to unpack the key challenges, opportunities and debates surrounding climate action and just transitions on the continent, and their relevance for business.
• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.
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