The Climate Change Global Business Summit, convened by the European House – Ambrosetti, tackled the critical issue of insufficient climate finance hindering Africa’s fight against climate change. Africa, despite minimal contribution to global CO2 emissions, bears a disproportionate burden from climate change impacts.
The continent faces a significant funding gap, with current climate finance flows to Africa covering only 11% (USD 29.5 billion) of what is needed annually to implement climate action plans (NDCs). Private funding is further limited, concentrated in countries with developed financial markets and focused on energy sector mitigation projects. Adaptation efforts, crucial for Africa’s resilience, are neglected due to perceived risks and uncertain returns.
The European House – Ambrosetti notes that key obstacles to progress notes include financial constraints, weak governance structures, limited technical expertise, and unclear and inconsistent data.
These challenges prevent Africa from translating policy commitments into concrete action. While African policy measures align with the Paris Agreement and the African Union’s climate change strategy, inconsistent implementation due to financial gaps and lack of coordinated governance remains a hurdle.
In East Africa, NDCs heavily rely on foreign support, with domestic resources covering only 18%. Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) have played a vital role in attracting foreign capital to Kenya, Ethiopia, and Tanzania.
Kenya attracted 28% of mapped capital flows for a total of $ 7 billion, with a focus on agriculture and urban development.
Proposed Solutions:
A Collaborative Approach for Enhanced Climate Finance: To tackle Africa’s climate finance gap, The European House – Ambrosetti recommends a collaborative approach. This involves governments, Multilateral Development Banks (MDBs), and the private sector working together to mobilize resources and drive climate action. Additionally, African governments need to strengthen regulations and policies to attract climate investments while ensuring transparency and stability.
Upcoming elections in 20 African countries present an opportunity to solidify democratic institutions and global governance for sustainable development. Finally, utilizing innovative financial instruments like results-based financing, risk mitigation tools, and capital market instruments can address climate finance barriers and cater to investor needs.
The Climate Change Global Business Summit emphasizes the urgency of collective action for Africa’s climate resilience. By implementing these recommendations and fostering collaboration, Africa can bridge the financial gap and accelerate its transition to a sustainable future.
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