The ongoing climate crisis globally remains the biggest challenge-sensitive economy and it requires urgent international attention as many people are suffering from climate variability.
Many African countries prone to droughts and floods are already at the front lines of the climate fight despite the continent contributing to less than 4% of global energy-related emissions.
For these countries, climate change is not a hypothetical future but a daily reality.
What is Climate Finance?
Climate finance refers to the funding at the local, national or transnational level that supports actions needed to combat and mitigate climate change.
How to Unlock it?
The African continent’s financial needs for adaptation and mitigation are estimated to exceed $1 trillion annually by 2030, yet Africa struggles to mobilize adequate public and private finance for climate action.
Here are 5 key ways African policymakers, businesses, and communities can stimulate private climate finances in their countries:
- Creating favorable regulations and investment conditions. African governments can develop climate finance policies focused on the financial sector as well as make reforms and frameworks to reduce barriers and costs of doing in their countries.
- Seize the financing opportunities available at the intersection of public and private resources and financial instruments that have proven effective in financing climate change, such as green bonds and blue bonds by building out National and Sub-National climate finance infrastructure.
- Restructuring existing debt to develop transition facilities to engage real economy players and create fiscal space for green investment projects in individual countries. This could provide a potential opportunity to attract foreign private climate funding.
- Creating a carbon market to raise private finance in Africa. With the right institutions and governance, African governments can harness carbon sinks like the Congo Basin, the second largest sink in the world, to tackle climate change.
- Creating an ecosystem of R&D in climate finance management, measurement, and reporting to increase transparency between donors and recipients. Funders need to be clear on the basis on which climate funds will be distributed, while transparency on the use of funds will be created on the part of recipients.
As countries plan toward Covid 19 recovery strategies and prepare for COP 27, they must include targeted financial interventions and inform the public on the importance of planting trees, conserving forests and water catchment areas among other forms of biodiversity to tackle climate change and reverse the crisis affecting vulnerable groups across African countries.
