Climate finance: a pressing need for Africa!
In 2015 the six largest multilateral development banks (MDBs) in the world jointly mobilized more than US $81 billion in climate finance, according to their latest joint report published on 9 August 2016: US $25 billion was provided by the banks themselves and another US $56 billion by external investors.
All these figures are contained in the 2015 Joint Report on Multilateral Development Banks' Climate Finance, which was published by the Asian Development Bank (ADB) along with the African Development Bank (AfDB), the European Investment Bank (EIB), the Inter-American Development Bank Group (IDBG), and the World Bank Group (WBG).
Since 2011 these six MDBs, including the AfDB, have invested a total of more than US $131 billion in climate finance.
Africa, the poor parent of global climate finance
On a global scale, however, Africa remains the poor parent of financial contributions to the fight against climate change, as revealed in this report: in 2015 the regions of Sub-Saharan Africa and North Africa each received 9% of the MDBs' total climate finance. This is less than half the amount received by European countries outside the European Union as well as Central Asian countries, which were given the largest share (20%). It is half the amount given to South Asia (18%), which, along with Africa, is another major victim of the effects of climate change around the world: it is also far below the amount given to Latin America and the Caribbean (15%), East Asia and the Pacific (14%), or the European Union (13%), and as much as the Middle East (also 9% of the total). The remaining 2% was allocated to multi-regional commitments.
Africa is already penalized by the extent of the consequences of climate change that it is experiencing, which are disproportionate compared with the continent's historic responsibility in this area, and sees itself as doubly wronged and not equipped with enough tools to combat this. This situation must not continue. African countries need more support and finance to address climate change.
The AfDB, on the front line of the battle
This is exactly what the African Development Bank is working towards. Between 2011 and 2016, thanks to its Climate Change Action Plan, the AfDB has mobilized more than US $8 billion for adaptation and mitigation projects on the continent – more than 200 projects in total. 2014 was a record-breaking year, with the Bank mobilizing 60% more in finance than in 2013 to fight climate change. On the eve of COP21, President Adesina committed the AfDB to providing US $5 billion every year to fight climate change from 2020. By then the budget allocated by the AfDB to combatting climate change will represent 40% of its new investments.
The AfDB has also signaled a fivefold increase in technical assistance projects for member states between 2014 and 2015. According to Alex Rugamba, chair of the AfDB's Climate Change Coordination Committee (CCCC), it is a substantial increase: "In line with our member countries’ requests in preparation of the Nationally Determined Contributions (NDCs) regime, we have particularly focused on institutional capacity building, increasing our support for technical assistance (TA) five-fold from seven projects to thirty-five projects in one year. As countries work to align their development goals with their pledged NDCs in the Paris Agreement, we believe this focus on strengthened capacity is an early signal of commitment to meet these goals. Going forward, this could be an important new area of engagement".
In addition to the numerous initiatives that the Bank leads in terms of appeals for climate finance – via the Africa Climate Technology Finance Center and Network, the Green Growth Initiative, and the secretariat of the SE4All Africa Hub – it acts on behalf of the 54 African countries with nine specific funds and mechanisms:
- Africa Climate Change Fund (ACCF), the most recent, launched in April 2014.
- African Water Facility (AWF)
- Agriculture Fast Track Fund (AFT Fund)
- Climate Investment Funds (CIF)
- ClimDev-Africa Special Fund (CDSF)
- Congo Basin Forest Fund (CBFF)
- Global Environment Facility (GEF)
- Green Climate Fund (GCF), for which the AfDB won its accreditation in March 2015
- Sustainable Energy Fund for Africa (SEFA)
Integrating climate change in development programs
As a sign that the continent and its 54 countries have an acute sense of the challenges represented by the effects of climate change and that they take this into account in their respective development visions, half of them have advanced climate solutions to the front burner in national development plans, according to Financing Change: the AfDB and CIF for a Climate-Smart Africa, the AfDB's 2015 annual report on the Climate Investment Funds (CIF) portfolio it manages. At the end of 2015, 27 African nations – half of those on the continent – were already committed to various climate change solutions thanks to the CIF portfolio supported by the AfDB. Ghana for its forestry sector, Gambia and Uganda for their national climate resilience programs, and Kenya for its two geothermal projects.
Renewable energies, Africa's great potential
Last year the Africa Pavilion at COP21 was the focus of the launch of a new major initiative led by the African Union and approved by the Committee of African Heads of State and Government on Climate Change (CAHOSCC): the Africa Renewable Energy Initiative (AREI). The goal is to produce 300 gigawatts (GW) of electricity for the continent by 2030.
Africa's renewable energy potential is enormous: in addition to the 10 terawatts that could be produced by solar energy, gas represents 400 gigawatts, hydroelectricity 350 gigawatts, wind power 110 gigawatts, and geothermal energy 15 watts (read this brochure on the AfDB's role in financing a climate-smart Africa). The use of green energies would enable Africa to meet 22% of its energy needs by 2030 (compared with 5% in 2013), and 40% in 2040, according to the Africa 2030 report by the International Renewable Energy Agency (IRENA). It is a positive sign that projects are multiplying in some countries. In February 2016 Noor ("light" in Arabic), the world's largest solar power station, to which the AfDB contributed the greatest share of the investment at roughly US $200 million (excluding CIF), was inaugurated near Ouarzazate in Morocco. At the other end of the continent, South Africa invested US $1 billion in renewable energy in 2014. Similarly, Kenya and Ethiopia are moving increasingly to renewable energies, as demonstrated by the wind farm installed above Adama in Ethiopia, at 2,000 m altitude, the most productive wind farm in Sub-Saharan Africa, or an iconic project such as the geothermal power station at Menengaï, which the AfDB also funded. In 2014, thanks to this project, Kenya was able to double its geothermal capacity, reaching 579 MW. In the Democratic Republic of Congo, the Grand Inga hydroelectricity project on the River Congo (another project supported by the AfDB) should reach a capacity of 40,000 MW once built.
This is the African Development Bank's message: climate change is clearly a huge threat to Africa. But we should seize this threat and transform it into an opportunity. An opportunity for real change and progress, capable of adapting to climate change to build an Africa that is prosperous agriculturally, self-sufficient in terms of food, rich in its biodiversity, with citizens in good health and receiving basic services, and economies stimulated by green growth.
Fighting climate change will become increasingly expensive
But this transformation, the opportunity made possible by climate change, is also expensive.
According to the African Development Bank (AfDB), the economic cost of climate change in Africa is between US $45 and 50 billion per year up to 2040, and will reach an average of 7% of Gross Domestic Product (GDP) anually by 2100.