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NigeriaDecides2023

Africa’s climate finance must hit $277bn to meet 2030 goals – Study

If Africa is to meet its 2030 climate goals and implement the Nationally Determined Contribution (NDCs), climate finance on the continent must hit $277 billion, a new study on the Landscape of Climate Finance in Africa says.

The study, commissioned by the Financial Sector Deepening Africa, the Children’s Investment Fund Foundation, and UK Aid finds that total annual climate finance flows in Africa – both domestic and international was $30 billion, which is just 11percent of the needed $277 billion.

The study, the first of its kind analysis to map climate finance flows in Africa by region, sector and source, identifies entry points, financing gaps and opportunities for new investments for investors and climate negotiators.

Barbara Buchner, CPI’s global managing director, said that “Africa offers a wealth of climate-related investment opportunities. New value chains are taking root as the continent’s industrial mix extends beyond extractives and other traditional sectors.”

“However, public and private actors must act with scale and speed to help bring Africa’s climate goals to fruition. While the investment opportunities are substantial, the social, economic, and environmental benefits which could be realized are even greater.”

The research identifies that private sector financing in Africa remains low at 14 percent of the total climate finance on the continent which is lower than other regions such as South Asia at 37 percent, East Asia and Pacific at 39 percent and Latin America and Caribbean at 49 percent.

According to the study, the Southern African region bears the financing gap in absolute terms, mainly attributed to high climate finance needs of South Africa alone, estimated at $107 billion, combined with one of the lowest regional levels of climate investment.

The study finds that Africa’s climate finance is in 10 countries that account for more than 50percent of the total, including Egypt, Morocco, Nigeria, Kenya, Ethiopia and South Africa.

It states that Africa strikes a better balance between adaptation and mitigation than other regions. “Mitigation accounted for 49percent ($14.6 billion) of climate finance flows in Africa, followed by 39percent ($11.4 billion) towards adaptation, and 12 percent ($3.5 billion) to dual benefits,” says the study.

“This is a positive trend, given Africa’s disproportionately high vulnerability to climate change. Yet funding for both adaptation and mitigation must still increase by at least six and 13 times, respectively.”

According to the study, there is a huge potential to translate Africa’s sustainable energy needs into investment opportunities and reduce investments in fossil fuels, however, it notes that despite annual investment in renewable energy — arguably the most attractive sector for commercial investors — investment still stands at $ 9.4 billion.

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The research calls for the need to boost funding for agriculture, forestry and other land use as it records only 16 percent of the total climate finance for the period.

“Despite the sector’s economic and social importance, and implications for food security, gender, biodiversity, and water security, it drew only 16 percent of the total climate finance in Africa.”

Speaking on the study, Mark Napier, chief executive officer, FSD Africa, said climate finance would be critical for enabling Africa to adapt to the growing impact of climate change.

“Public and the much larger sums of private sources of financing remain critical components of climate finance for Africa. The research findings, represented in this new report, the Africa Landscape of Climate Finance, provide the first independent, comprehensive, and accurate analysis of the funding that is currently available to Africa,” Napier said.

“This data is crucial to set the context for negotiations at COP27 and our ability to measure global progress on climate finance.”