African Development Bank leads on creating an Africa Financial Alliance for Climate Change
Seven of the 10 countries in the world most threatened by climate change are in Africa. African economies are already suffering the devastating effects of climate change, further exacerbating their development challenges. In response, the African Development Bank is leading the way on what may be Africa’s most decisive action to ensure that the continent receives adequate climate finance.
At its 53rd Annual Meetings in Busan, Korea, the Bank brought together key continental and global stakeholders for an open dialogue on creating the Africa Financial Alliance for Climate Change. The initiative was well received; participants agreed that Africa needs immediate climate change action.
Akinwumi Adesina, African Development Bank President, explained, “As Africa’s premier development financial institution, the African Development Bank is already taking action. The Bank is leading Africa’s transition to climate-resilient economies.” The financing needs to meet the ambitions of the Paris Climate Agreement in Africa are enormous. The implementation of Africa’s Nationally Determined Contributions would require investments of at least US $2.7 trillion for mitigation and another US $488 billion for adaptation by 2030.
The 2015 Paris Climate Agreement calls on countries to increase their ability to adapt to the adverse impacts of climate change without threatening food production, and to make finance flows consistent with a pathway to low greenhouse gas emissions and climate-resilient development. The international community has pledged to mobilize US $100 billion in climate finance annually by 2020 to support adaptation and mitigation projects in developing countries. Of the US $820 billion in climate finance flows for 2015 and 2016, however, only US $16 billion, or 2%, targeted Africa.
Adesina observed that the Bank could not achieve the task alone, pointing out that the Paris Climate Agreement must be successful in Africa for the world to achieve the requisite reductions of greenhouse gases to keep global temperatures below the required target. “This is why the African Development Bank is hosting this open dialogue to initiate the establishment of the African Financial Alliance for Climate Change as a call for us to stand together to mobilize climate finance at scale to meet the needs in Africa.”
The Alliance brings together Africa’s financial sector, including Ministers of Finance, Central Banks, insurance and reinsurance companies, sovereign wealth and pension funds, stock exchanges, and global thought leaders to mobilize climate finance for Africa. It also hopes to come up with concrete proposals to mobilize domestic and international finance for climate-resilient development in Africa. “Together, we can create a Decarbonisation Index for Africa,” Adesina stated.
“The idea of having the Alliance is fantastic, because we recognize that the world is also looking to us. While Africa is not the primary cause of the climate change that we see in the world today, we are the continent where the impact is very great, and the world is not as prepared to finance us to take care of this impact. We can’t let it go because it is our people who are suffering,” said Ngozi Okonjo-Iweala, Chair of the Africa Risk Capacity.
She continued, “Just for you to know the impact of climate change, of all the drought that occurs in the world, 41% occurs on the African continent. We lose about 485, 000 people to indoor pollution, premature deaths that could have been avoided and the devastating impact caused by flood. I can go on and on.”
Patrick Dlamini, Southern Africa Development Bank President and Chair of the Association of African development finance institutions (DFIs), observed that collaboration was crucial to catalyzing funds and making a difference. “This is possible under the leadership of the African Development Bank. We can then play our role as development finance institutions to being the policy instruments of our various Governments and in alliance with partners.”
Naoko Ishii, CEO of the Global Environment Facility, pledged the support of her organization for the Alliance and was optimistic that it would motivate the GEF to do much more for Africa.
According to Green Climate Fund CEO, Howard Bamsey, “The Alliance is a fundamental step towards meeting the climate change challenge in Africa. There has to be an African solution to the challenge that we face and this initiative presents the opportunity to mobilize that.”
The launch of the Africa Financial Alliance for Climate Change will take place during the Africa Investment Forum in South Africa, from November 7-9, 2018, and will bring together heads of financial institutions.