Climate change clock ticking in Africa - how private money is going to save the day

10 most vulnerable nations, including Somalia, Burundi, Niger & Eritrea, benefited from only 7% of multilateral adaptation aid

IT has been forewarned for decades that global temperatures are rising and climate-related disasters are imminent, or in some places, already occurring. These disasters will have an increasing impact on poverty, with more than 325 million poor people across 49 of the most affected countries becoming more vulnerable as soon as 2030. 

In response, developed countries have committed to mobilising finance to help developing countries respond to climate change. However, since 2003, almost half of the $8 billion in climate financing given to the developing world went to just 10 countries - this from a report, recently released by the leading UK think tank Overseas Development Institute (ODI) which look looked at spending over the last decade in 135 countries.

Titled “Climate finance: is it making a difference?”, the report showed that Morocco, Mexico, Brazil, South Africa and India each received over half a billion dollars, largely as loans, of the $7.6 billion total.

Poor nations, as usual, left behind

The report described climate finance architecture - whether the right money is going to the right places - as “largely positive” and that “the finance they spend is targeting countries that need it.” Studying the report, it was also clear that many of the poorest African countries were also being left behind, inhibiting Africa’s most vulnerable people from building resilience against the threats posed by a changing climate. 

Over the last decade, conflict-affected and fragile states such as Cote d’Ivoire and South Sudan received less than $350,000 and $700,000 respectively. Middle income countries that are vulnerable to the impacts of climate change and have significant clean energy potential, such as Namibia, also received less than $5 million. 

One element of climate finance that seemed particularly promising was in the crucial area of adaptation finance, which the report stated “targets poor and vulnerable countries, particularly in South Asia and sub-Saharan”. Adaptation finance is key since it dictates how well a country weathers the climate change storm and includes adaptation measures such as; early warning systems and coastal zone management to counter sea-level rise offer a possibility of minimising these impacts. 

But these measures are expensive and Africa’s capacity to adapt depends critically on access to funding. Looking at African country vulnerability in terms of their “adaptive capacity”, which refers to their ability to adapt to the negative impact of climate change as illustrated by the ND-GAIN Index, we see a large discrepancy between the capacity African countries have to adapt and the amount of money they’ve received in adaptation finance as outlined by the ODI report. 

Even though the ODI report states that funding for adaptation rocketed from $3.8 million in 2003 to $2 billion this year, with the sub-Saharan Africa region receiving the largest total volume of finance ($772 million), it also stated that this is not enough. For example, the 10 most vulnerable nations which include Somalia, Burundi, Niger and Eritrea, benefited from only 7% of adaptation aid.

Unep’s Africa Adaptation Gap Report, released in 2013, found that adaptation costs for Africa alone could reach approximately $350 billion annually by 2070 should the 2°C target (as outlined by the 2009 Copenhagen Accord) be significantly exceeded and the emissions gap is not closed. 

Volatile events

Looking at Unep’s report, with 4°C warming by 2100, sea-level rise along most African coasts could approach or exceed one metre; there will be extreme weather events and agricultural and fishery productivity will be diminished. 

At warming exceeding 3°C globally, virtually all of the present maize, millet, and sorghum cropping areas across Africa could become unviable. However, even a warming close to 2°C will lead to a substantial increase in under-nourished people in sub-Saharan Africa - this will be staggering considering that the Food and Agricultural Organisation (FAO) estimated that in the period 2010-2012, approximately 239 million people were undernourished in Africa, that is about 23% of the continent’s total population.

Africa’s urban areas will also be heavily affected, those particularly at risk will be cities on coastlines and individuals living in informal settlements. Poor urban populations have been found to be the most vulnerable to elevated food prices following disruptions to agricultural production.

Priority adaptation actions

African governments have stepped up and identified priority adaptation measures, most of which are clearly outlined in National Adaptation Programme of Actions (NAPA) - projects which were to be supported by the Least Developed Countries Fund (LDCF) which was one of the funds reviewed in the ODI report. 

The projects outlined in NAPA are however often long-term and highly expensive. The Democratic Republic of Congo wants $5.6 million for a project to strengthen agricultural production capacities, which includes the multiplication of improved seeds of corn, rice and cassava - yet it only received $18.6 million in adaptation finance over the last decade. Or Liberia which is seeking $60 million for a coastal defense system for the cities of Buchanan and Monrovia to reduce the vulnerability of coastal urban though the country received just $12.21 million in the last 10 years in adaptation finance. 

Fortunately Africa is no longer having to solely rely on multilateral climate finance to fill this huge gap. 

Private sector

The globalisation of markets and supply chains have meant that private interests are increasingly interdependent with the well-being of Africa’s environment. As PwC states, “many of the impacts of climate change are already being felt by businesses, and experience of adaptation practices is steadily building” - so the private sector is stepping in. 

In Johannesburg, South Africa, last month the first Africa Climate Change Investor Forum was held. Signalling a key factor in Africa’s fight against climate change - that private-sector financing is expected to play a key role going forward, supporting climate change adaptation initiatives that will help reduce the vulnerability of human and natural systems. Hosted by the International Development Research Centre grantee, the Climate Technology Initiative’s Private Financing Advisory Network (CTI PFAN), the forum served as an opportunity for actors to present proposals for African adaptation projects to potential investors. 

The 240 proposals submitted were potential projects in Africa that were ready to deploy climate change technologies, products, and services within a range of sectors including: agriculture and agri-business, water and sanitation, urban initiatives, micro-finance and micro-insurance, energy access, tourism, and forestry and ecosystem services. 

Private sector examples

The United Nations Framework Convention on Climate Change also recognised this, stating that, “many opportunities are unfolding for private companies to implement actions towards reducing risks to their business operations, as well as investing in adaptation action in vulnerable regions in a sustainable and profitable manner” and includes an online database of case studies developed under Private Sector Initiative (PSI), and features good practices and profitable climate change adaptation activities being undertaken by private companies. 

Examples include, projects by Nestle in Cote d’Ivoire to provide farming and training assistance, CB Richard Ellis supporting UNICEF work constructing cyclone-proof and eco-friendly schools in Madagascar and CafÈdirect plc supporting smallholder tea farmers in Uganda faced with climate change challenges to increase food and tea production and conserve the environment.

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