Africa is the least climate-resilient region in the world, with high vulnerability to climate change and low readiness for its impacts.
A majority of African countries will be particularly affected given their lack of financial resources, technical capacity and infrastructure.
United Nations estimates that Africa’s historical and current carbon emission share is below three percent of global emissions, but the burden of climate change on economies and livelihoods in the continent is unacceptably high. Incongruously, 96 percent of the funds targeting Africa are focused on emissions reduction.
The continent will require a major scale-up in the quality of investments in three critical areas — energy transitions and related investments in sustainable infrastructure, investments in climate change adaptation and resilience and restoration of natural capital — agricultural production, food and sustainable land use practices — and biodiversity.
All three areas are important for the continent, but needs will vary by country.
In Kenya, for example, overall climate finance flows still fall short of what is needed to achieve the Nationally Determined Contributions (NDCs) and this gap is mostly in the adaptation sector.
The government estimates that Sh7.4 trillion ($62 billion) is required to implement Kenya’s NDC (mitigation and adaptation actions) between 2020-2030. Other East African countries (Rwanda, Tanzania and Uganda) will require at least Sh11.2 trillion ($92.45 bn) for mitigation and adaptation by 2030.
The 2021 Landscape of Climate Finance Report indicates that about 79 percent of the climate finances in Kenya were directed to the implementation of climate mitigation measures, whereas adaptation only accounted for 11.7 percent
Public funding alone will not be sufficient, given the magnitude of investments needed, and current and future constraints on public domestic resources in Africa.
Africa is an attractive destination for private capital as it offers the highest returns compared to most emerging market economies.
For the last two decades, the continent has seen steady economic growth underpinned by commodity exports, growing market demand and strengthened structural elements.
Africa, however, faces multiple challenges that make it even more necessary to benefit from climate change financing at reasonable rates.
The challenges include a heavy debt burden, a historically high cost of borrowing, and a slower post-Covid-19 recovery. Concessional finance from bilateral donors remains the most critical component of climate finance for Africa given its fiscal constraints and large needs for adaptation and resilience, as well as nature and biodiversity.
As African countries attend the COP27 climate change conference in Egypt, there is a pressing need to lobby for additional and lower-cost financing to address the continent’s current limitations to deal with climate events, as well as resources to deal with future climate change challenges.
I&M Group on its part has gone a step further and established an social and governance policy that guides its strategy, business activities, and relationship with stakeholders.
Unlocking finance for climate change adaptation is key to building a resilient Africa. Financing that Africa needs should focus less on emissions reduction and more on building societies that are more adaptive and resilient to climate change.
Maina is the chief executive of I&M Bank
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