- Two years after the much-hyped 2023 Nairobi Declaration, climate finance across Africa remains a work in progress, often marked by painful delays.
- Across the continent, data shows that renewable energy financing is the only segment that recorded increased adaptation financing.
- Only a handful of African countries receive more than 50 percent of climate financing.
Over the past twelve months, climate finance for Africa remains a major challenge, even though there was notable progress in the previous cycle (2024), where reports showed a slight increase in some areas. While commendable, the increase did not bring climate finance in Africa even close to the amount needed, nor did it meet the promises made during the much-hyped 2023 Nairobi Declaration.
Titled ‘Landscape of Climate Finance in Africa 2024’, this latest report, which was launched on the sidelines of the annual meeting of the International Monetary Fund and the World Bank Group, shows a significant gap in climate finance despite the said upturn.
The report not only shows gaps in funding, but also in tracking this funding. Of the amount needed to implement Africa’s Nationally Determined Contributions (NDCs) and meet 2030 climate targets, only 23 percent of estimated annual financing is being tracked, the report said.
The report, which is the first after the CPI and FSD Africa assessment of climate finance released in 2022, commends the increase in financing. For example, multilateral development finance institutions (MDBs) issued $19 billion, which represented 43 percent of total financing, up from the $11 billion given two years earlier.
To date, MDBs remain the largest providers of climate finance in Africa. In particular, 90 percent of the aforementioned climate financing for Africa came from international sources.
Another positive increase came from private sector financing, which reportedly doubled from $4 billion to $8 billion, but still only made up 18 percent of the total. Of all financing, clean energy financing represented almost a third of total climate financing at $14 billion.
The report draws attention to a disturbing fact that “this growth rate is insufficient given Africa’s need for $200 billion per year for the clean energy transition, as estimated by the International Energy Agency.”
As for the Multilateral Climate Funds (MCFs), they amount to only 2 percent of total climate financing and are mostly concessional funds given to the least developed countries (LDCs).
What is even more worrying is the fact that even with the less than adequate funding, this minimal amount is given to only a handful of African countries. “There are large regional differences, with ten countries responsible for 50 percent of total African climate finance flows. South Africa, Egypt and Nigeria received more than half of the private financing.”
Ultimately, no one can put climate finance for Africa into perspective better than Barbara Buchner, Global Managing Director of CPI; “While it is encouraging to see more climate finance flows into Africa, the rate of growth is too slow.
Public policies and investments must be more effective, and both domestic and international private capital must no longer be left on the sidelines. Otherwise, Africa’s economic opportunities will be overshadowed by significant economic losses and social impacts.”
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Climate finance: Africa can provide global solutions
Two years after the Nairobi Declaration issued at the end of the African Climate Summit in September 2023, climate finance for Africa remains a challenge.
Although world leaders at the event spent most of the time discussing how to mobilize finance to adapt to climate change conditions such as extreme weather, as the 2024 progress report showed, little progress has been made, with the exception of a slight increase for renewable energy solutions.
The position of the African countries is clearly expressed in the Nairobi Declaration; “Big polluters are deploying more resources to help poorer countries.” The Nairobi Declaration calls for “a global carbon tax regime, including a carbon tax on fossil fuel trade, maritime transport and aviation, and a global tax on financial transactions.”
“Implementing such measures at the global level, financing climate-related investments and insulating the issue of tax increases from geopolitical and domestic political pressures,” the Nairobi Declaration said.
This is because although the entire world is suffering the effects of global warming due to climate change, and more so Africa, the continent has contributed only a fraction of all historical CO2 emissions largely generated by the United States, Europe, China and India.
This is because although the entire world is suffering the effects of global warming due to climate change, and more so Africa, the continent has contributed only a fraction of all historical CO2 emissions largely generated by the United States, Europe, China and India.
This is because although the entire world is suffering the effects of global warming due to climate change, and more so Africa, the continent has contributed only a fraction of all historical CO2 emissions largely generated by the United States, Europe, China and India.
The Intergovernmental Panel on Climate Change (IPCC) is clear on this issue; “Africa is suffering some of the worst impacts of climate change, including prolonged droughts, floods and lower crop yields.”
While Africa suffers from carbon emissions elsewhere, responsible countries are still lagging behind in financing the necessary adaptation solutions. IPCC underlines this fact and reports that; “As the impact of climate change increases across the continent, Africa is receiving only about 12 percent of the financing it needs to cope.”
The problem doesn’t end there. Although Africa does not receive the climate financing it has promised, the Climate Policy Initiative says African countries also pay a higher price when borrowing to adapt to climate financing.
“Their borrowing costs are five to eight times higher than those of rich countries, creating even more debt that prevents them from investing more in combating climate change. In Africa, we can be a green industrial hub that helps other regions achieve their net-zero strategies by 2050. Unlocking the renewable energy sources we have on our continent is not just good for Africa, it is also good for the rest of the world,” Kenyan President William Ruto advised world leaders at the Climate Summit, pointing out an important fact that rather than just receiving funding to adapt, Africa can actually lead the world in solving the climate crisis.
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