Here’s how African leaders can close the climate finance gap

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Kulé Gal, Community Engagement Specialist, Young Global Leaders, World Economic Forum.

• Between now and 2030, Africa will need $2.8 trillion to fulfil its Nationally Determined Contributions under the Paris Agreement.
• Currently, annual climate finance flows on the continent are only $30 billion.
• We asked four of our Young Global Leaders what African leaders can do to close the climate finance gap.

Africa is set to disproportionately bear the brunt of climate change. The continent has contributed the least to global warming, and has the lowest emissions, but is most vulnerable to the implications of global warming under all climate scenarios over 1.5 degrees Celsius. Along with climate challenges, the continent is also experiencing a deluge of shocks, including COVID-19 recovery, slowing economic growth, and rising living costs.

With these competing issues happening in parallel, leaders must remain committed to the cause of climate mitigation and adaptation – particularly when climate change threatens the livelihoods of over 100 million in extreme poverty. Achieving this requires adequate funding and resources, but Africa’s current climate finance level falls far short. Between now and 2030, Africa will need $2.8 trillion to fulfil its Nationally Determined Contributions under the Paris Agreement.

Closing Africa’s climate finance gap

COP27 in Egypt, dubbed the African COP, provides a platform for African nations to discuss a climate finance package to bridge this gap and advance the African Union’s Climate Strategy. While a just energy transition requires industrialized countries to honor their pledge of $100 billion annual climate finance, African leaders can and should explore alternative financing solutions, given the scale of required climate and adaptation finance.

With this context, we asked four Young Global Leaders (YGLs) what leaders can do and are doing to close the financing gap.

1. James Mnyupe is working to ensure that Namibia is investing in more renewable energy sources by focusing on climate adaptation instead of climate mitigation. At COP27, he helped launch SDG Namibia One, a fund that aims to develop Namibia’s green hydrogen economy by streamlining access to public, private and philanthropic capital. He plans to mobilize capital from commercial investors at scale by leveraging more risk tolerant investors, such as donors and development finance institutions (DFIs). Through this initiative, leaders like James are showing how novel solutions that cater for the needs of investors and African citizens alike can act as a bridge between ambition and action.

2. As a leader in finance and philanthropy, Anulika Ajufo says that closing the climate funding gap in Africa requires innovative finance and the strategic deployment of public capital to ‘crowd-in’ private investment. By deepening financial markets and de-risking projects through concessional finance and technical assistance, leaders can help increase financial flows to the Continent. She argues that leaders can also scale up impactful initiatives, like the Sub-National Climate Finance Initiative, and do more to communicate success stories with the goal of attracting more private sector funding.

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What is a YGL?

The YGL community is made up of more than 1,300 members and alumni, including public officials, business innovators, artists, educators, technology developers, journalists and activists.

The mission of the Forum of Young Global Leaders is to create a dynamic global community of exceptional people with the vision, courage and influence to drive positive change in the world.

Aligned with the World Economic Forum’s mission, they seek to spur public-private cooperation amongst these unique actors to demonstrate entrepreneurship in the global public interest.

Representing more than 100 nationalities, Young Global Leaders are united by the belief that the urgent problems of today present an opportunity to forge a better future across sectors, generations and borders.

Visit the YGL website at: https://www.younggloballeaders.org/

3. Landry Signé, an expert in African growth and development, believes that leaders should capitalize on emerging technologies associated with the Fourth Industrial Revolution to overcome the existing climate financing gap. Several innovative and disruptive financial instruments can be used to achieve this, including effective trading systems for greenhouse gases, green bonds and loans, sustainability-linked bonds and loans, and debt-for-climate swaps. However, traditional instruments dominate climate finance flows in Africa and the private sector has historically played a smaller role. According to Landry, increasing the private sector’s involvement requires leaders to create an enabling environment, engage in agile governance, and facilitate effective multistakeholder collaboration.

4. Sanae Lahlou has spent her career promoting sustainable growth in developing economies. From her perspective, the international climate finance community needs to urgently target more de-risked capital. It is no secret that climate mitigation investment in Africa remains underexplored compared to such investments in other emerging regions. To combat this, Sanae calls on leaders to “allow the continent to mobilize more private climate investors through public-private-partnerships (PPPs) with appropriate risk mitigation structure and technical assistance incentives”.