Policymakers advocate innovative mechanisms to address Africa’s $300bn climate adaptation shortfall

By Cynthia Ezekwe.

With Africa requiring over $300 billion annually for climate adaptation, policymakers and government officials have called for the implementation of innovative mechanisms to unlock finances for climate adaptation.

Policymakers made the call at a high-level event on the sidelines of the Africa Climate Summit held recently in Nairobi

The event was co-hosted by AfriCatalyst, an independent, global development advisory firm and Open Society Foundations (OSF), a private funder of independent groups.

In his keynote address, Ibrahima Cheick Diong, the United Nations assistant secretary-general and director general of Africa Risk Capacity Group (ARCG) stressed the importance of exploring new paradigms to mobilise finances for climate adaptation.

“It can’t be business as usual – we need to innovate. We need to create a triple A of climate finance; Adaptability, Affordability, and Accessibility of climate finance. I believe that adaptation and mitigation can go hand in hand,” Diong said.

Vera Songwe, a non-resident fellow at Brookings Institute, underlined the need for effective governance and reforming policy frameworks to favor investments in climate initiatives such as renewable energy, green transition, and sustainable public infrastructure.

Songwe said Africa needs to get out of its slow growth through reformations in the global financing architecture to create room for fundings.

“Domestic resource mobilisation from carbon markets is pivotal. A more transparent carbon market exchange will encourage this. In a perfect carbon market, Africa can earn about $50-180 dollars,” she added.

Amadou Hott, the Special envoy for the president of the African Development Bank (AfDB), highlighted the critical role philanthropy has in helping governments address the skill gap by helping them attract talent but also providing them with valuable capital that can serve as guarantees.

“This will enhance the creditworthiness of projects and make commercial banks and private equity to be comfortable. The way we have structured the Alliance for Green Infrastructure in Africa, is in line with how the partnerships should be done to mobilise climate finance at scale, we are looking at the entire value chain,” Hott added.

During the event,  Mahmoud Mohieldin, UN climate change high-level champion for COP27, called for the African countries to explore their rich carbon sinks to attract more financing through carbon markets.

He noted that Africa has bankable projects and investable projects but needs better business environments, better regulatory incentives and better marketing opportunities, supported by an integrated financial framework on national levels.

According to Mohieldin, mitigation should come from private equity participation, while adaptation should come from concessional finance.

On his part, Denys Denya,  the executive vice president finance administration and banking services at the African Export Import Bank (Afrexim Bank), underscored the pivotal role that multilateral development institutions play in providing guarantees, attracting external investors and financing initial roll-outs.

Denya highlighted the bank’s commitment to collaborate with relevant players to answer the climate question.

“Africa Export-Import Bank (Afreximbank) has set up $500 million which will help in climate projects. The private sector considers some climate projects as risky. The public sector cannot by itself finance these projects. By providing concessional funding, grant funding and guarantees to investors to look at projects differently,” he added.