Adesina, Okonjo-Iweala, lament Africa’s handicap in crisis response
Ben Eguzozie is business a.m. regional lead based in Port Harcourt, providing regional and national coverage for economy, business and finance
You can contact him on ben.eguzozie@businessamlive.com with stories and commentary.
Africa’s global citizens: Akinwumi Adesina, president of African Development Bank (AfDB); Ngozi Okonjo-Iweala, director-general of World Trade Organisation (WTO), and Vera Songwe, UN under-secretary-general and executive secretary of UN Economic Commission for Africa (UN-ECA); and Ibrahim Assane Mayaki, chief executive officer of New Partnership for Africa’s Development (NEPAD), have raised a joint lamentation for the continent with respect to its response capacity to the climate change vagaries and Covid-19 health emergency.
An op-ed published in this newspaper, the African global citizens saw disparity evident in efforts for Africa to address the climate crisis as well as the unequal nature of the global response to the Covid-19 pandemic. Africa is sorely treated with apparent scant by the Global North.
A sampler: whereas Western economies have mustered over $10 trillion, or 30 percent of their combined GDP to respond to the Covid-19 pandemic, African countries have managed to spend the equivalent of one percent of their GDP to tackle the ravaging virus.
Additionally, Europe and the United States have fully vaccinated, respectively, 75 percent and 70 percent of their adult populations against COVID-19, but fewer than six percent of Africans have been vaccinated. And while some Western countries are already administering booster shots, Africa cannot get initial doses, they reeled out baffling statistics.
The rest of the world appears not to notice the danger in the Africa exclusion by the Western economies, a development the three African international citizens describe as “systemic inequality”. They apparently warn: “Climate disasters, like viruses, know no boundaries”.
For Adesina, Okonjo-Iweala, Songwe and Mayaki, “Africa needs decisive collective action rather than more encouraging words”.
So far, South Africa recently issued a R3 billion ($196 million) green bond to refinance its energy sector. Such issuances are an example of the type of investment that is possible by unlocking bond markets for Africa. We need to make such investments the rule rather than the exception.
In addition, the African Development Bank (AfDB) Group has proposed establishing an African Financial Stability Mechanism. Such a scheme will help prevent future financial shocks in Africa – the only continent without a Regional Financing Arrangement – from having spillover effects.
Adesina, Okonjo-Iweala, Songwe, and Mayaki, have therefore proposed a “strategic financial and trade package that can transform climate inequality into inclusiveness by ensuring a transformative shift of resources from historic greenhouse-gas (GHG) emitters to Africa”.
The plan rests on four pillars: first, developed economies must keep the promise they made in the 2015 Paris climate agreement to deliver $100 billion per year to help cover developing countries’ adaptation and transition costs.
That failure to fulfil this overdue commitment now, with half of the $100 billion earmarked for adaptation costs, will undermine the very principle of multilateral action. “It is a provision in an international agreement, and it must be honoured. The fact that the developed world mobilized $10 trillion to counter the pandemic in 2020 alone demonstrates just how small an amount $100 billion per year really is. Yet, in that same period, official development assistance (to Africa) increased by only 3.5 percent in real terms”.
The second pillar is to align financial markets with the Paris agreement’s goals; insisting that “mainstreaming the impact of climate change in investment decisions is critical, and judicious deployment of private capital in green sectors will transform African countries and developing economies in general”.
To that end, the Glasgow financial alliance for Net Zero, chaired by former Bank of England Governor Mark Carney, has brought together firms with a combined $90 trillion in assets.
“There must now be an urgent and determined effort to channel this private finance into growing climate-friendly sectors in Africa and other developing countries,” the African global citizens affirmed.
With that in mind, the UN-ECA earlier this year proposed a liquidity and sustainability facility that aims to reduce borrowing costs linked to green investments by developing a repurchasing (repo) market for the continent. The initiative will be financed through seed funding of $3 billion IMF’s special drawing rights – SDRs (reserve asset), intended to de-risk private investments in Africa and help the region increase its share – currently less than 1 percent – of the global green bond market.
The third proposed pillar by the threesome, is to provide the significant resources Africa needs to enable its economies to adapt to global warming. Climate change is costing the continent $7 billion – $15 billion annually and threatens both food security and the use of hydropower. But sub-Saharan Africa, which accounts for less than 4 percent of global GHG emissions, receives just 5 percent of total climate finance outside the OECD.
According to Adesina, Okonjo-Iweala and co, “instead of simply waiting for such financing to materialize, Africa is tackling climate adaptation head-on with homegrown solutions. The AfDB currently devotes 63 percent of its climate finance to adaptation, the highest share of any multilateral financial institution, and has committed to double such funding to $25 billion by 2025. The AfDB and the Global Centre on Adaptation have also created the Africa Adaptation Acceleration Programme (AAAP) to help scale up bankable adaptation investments in the region. The mobilization of $25 billion via the AAAP will be a first step toward investing in a green recovery for Africa.
They have called on the newly formed African Continental Free Trade Area (AfCFTA) to provide an impetus for hardwiring commitment to low-carbon development. We must recognize Africa’s specific needs, acknowledge the continent’s vulnerability to climate change, and identify the regions and communities where its consequences have caused the most harm.
Meanwhile, next year’s UN climate summit, COP27, will take place in Africa, with the continent looking forward to welcoming the world.
But Adesina, Okonjo-Iweala, Songwe and Mayaki, are bent on getting the developed countries to fulfil their longstanding climate promises to the region well before then – starting in Glasgow.