COM2024: Climate financing hurdles take centrestage at African economic ministers’ conference

by | Mar 4, 2024 | Business, International, Local News, Politics, Wheather | 0 comments

COM2024: Climate financing hurdles take centrestage at African economic ministers’ conference

Staff Reporter

Some of the home-grown financing solutions that some African countries have already started embracing include carbon trading.

As African Finance and Economic Development ministers gather in Zimbabwe to discuss the way forward for the continent that is struggling to develop, climate change is emerging as one of the most worrisome obstacles that has to be overcome.

The 42nd meeting of the Committee of Experts of the Conference of Ministers of Finance, Planning and Economic Development (COM2024) is being held at the Zimbabwean resort town of Victoria Falls. The theme this year is “Financing the transition to inclusive green economies in Africa: imperatives, opportunities and policy options”.

Antonio Pedro, deputy executive secretary at the Economic Commission for Africa (ECA), said the African continent has not been spared from the effects of climate change.

“The continent faces disproportionate burdens and risks arising from climate change-related events and patterns,” Pedro told the conference.

“These include prolonged droughts, devastating floods, and out-of-season storms — all of which cause massive humanitarian crises and deepen our economic vulnerabilities.”

Africa suffering disproportionately
Different countries on the African continent are suffering from varied combinations of the effects of climate change that range from droughts to cyclones to super-storms to floods to locust invasions and everything in between — all resulting from the relentless release of carbon emissions into the atmosphere.

Africa contributes only four per cent of these emissions compared to China’s 23 per cent, the United States’ 19 per cent and the European Union’s 13 per cent, according to the United Nations Intergovernmental Panel on Climate Change (IPCC). The continent is, however, among those suffering the worst impacts of climate change.

Resource mobilisation challenge
The conference noted that credible estimates of the financing needs of Africa suggest that an additional $194 billion per year, equivalent to some 14 per cent of the continent’s current gross domestic product (GDP), is needed to support the continent’s transition to sustainable power generation and the achievement of the UN-mandated Sustainable Development Goals.

“The mobilisation of those resources may, however, prove challenging in the absence of significant reforms to current global financial architecture, which, as underscored by the UN, “has been unable to support the mobilization of stable and long-term financing at scale for investments needed to combat the climate crisis and achieve the Sustainable Development Goals for the eight billion people in the world today,” highlighted the event’s concept note. “It is plagued with inequities, gaps and inefficiencies that are deeply rooted in the system.”

It is for this reason that the African continent is hopeful to benefit from the Loss and Damage Fund set up at COP27 in Egypt. However, with the grudge payments by high emitters proving difficult to flow into the Fund, the conference called for African states to transition into inclusive, low carbon, and resource-efficient economies by tapping into home-grown innovative solutions for financing.

While the African ministers have to grapple with raising funds to meet existing needs of their respective countries, they have to raise additional funds to mitigate, and adapt to, the effects of climate change.

“Financing the transition to inclusive green economies comes with a cost and we need to finance this transition with the support of the international community and promoting investment in renewable and environmentally friendly sources of energy,” Zimbabwe’s finance minister, Mthuli Ncube, who is hosting the event, said.

Carbon markets financing option
Some of the home-grown financing solutions that some African countries have already started embracing include carbon trading. Several African countries are keen to increase their presence in the global carbon markets. As a result, the Africa Carbon Markets Initiative (ACMI), which aims to support the growth of carbon credit production and create jobs in Africa, was formed in November 2022.

The new partnership aims to harness Africa’s largely untapped potential to contribute to the supply of carbon credits while unlocking billions in revenue.

Countries such as Kenya, Malawi, Gabon, Nigeria and Togo have already started collaborating with the ACMI to scale carbon credit production via voluntary carbon market activation plans.

Organised by ECA annually, the conference brings together African ministers of finance, planning and economic development, governors of central banks and entities of the United Nations system.

In addition, it also includes the participation of pan-African financial institutions, youth representatives, African academic and research institutions, development partners, intergovernmental organisations and other key stakeholders on an annual basis to engage and exchange views on the state of economic and social developments in Africa.