Aid for trade and climate change financing mechanisms
This report, Aid for trade and climate change financing mechanisms, focuses on links between climate change adaptation measures undertaken by African least developed countries (LDCs) and small and vulnerable economies (SVEs) and their impact on trade.
Trade and climate change issues are intricately linked, especially in Africa, where economies rest on agriculture, a sector that is extremely vulnerable to climate change. The cumulative evidence shows that sub-Saharan Africa (SSA) will be the most affected region of the world. Climate change-induced events, such as droughts, global warming, and rises in sea levels, will have substantial impacts on Africa’s agricultural crops, livestock and fisheries, water resources, coastal zones, and infrastructure as well as on human health.
Africa’s position in world trade is marginal, and various factors, including geography; concentration on low-value, inefficient agriculture; distorted policies; deficient infrastructure; and poor institutional support, have prevented African LDCs and SVEs from taking advantage of existing market access privileges, like the African Growth and Opportunity Act (AGOA) and economic partnership agreements (EPAs), to integrate into the world economy in more important ways that would make an impact on economic development and poverty alleviation.
The Aid for Trade (AFT) initiative has been welcomed as an instrument that carries the potential to help developing countries, and LDCs in particular, address key infrastructure-related bottlenecks as well as build productive capacity in ways that would allow them to generate greater exports.
This paper explores how climate change financing and aid for trade can address the climate change adaptation needs and specific supply-side constraints of African LDCs and SVEs in a complementary and supportive manner.