Exploring Africa’s options for unlocking climate finance
This feature, from the Africa LEDS Partnership’s Emma Baker, discusses the outcomes of our regional workshop, ‘How can Africa finance LEDS and NDCs implementation?’
Since the signing of the Paris Agreement, which has now been ratified by 178 countries across the world, the focus of climate change conversations has shifted from “intended” climate actions to the implementation of national climate change commitments (NDCs). Whether the 1.5oC target is attainable or not, for Africa, one of the main priorities is the pursuit of low emission development strategies (LEDS) that combine climate change actions with national development priorities. However, the ongoing challenge for African governments, civil society and private sector organizations involved in LEDS and NDC implementation is access to finance.
The Africa LEDS Partnership, which serves as a regional platform for LEDS activities in Africa, brought together over 80 members for an annual workshop in Kigali last month to discuss the theme, ‘How can Africa finance LEDS and NDCs implementation?’ With an emphasis on peer-to-peer learning, the broad aim of the workshop was to share knowledge, highlight leadership and strengthen collaboration between African countries on low emission and climate resilient development strategies.
“The Africa Rising narrative remains intact” pronounced one of the panellists, Andrea Athanas from GECCO, as more foreign direct investment is currently flowing to Africa than any other continent. Yet climate change presents a major threat to future growth and development and has the potential to undo recent progress on poverty reduction, health, education etc. So why is climate finance still so difficult to access?
The workshop brought to light three main challenges faced by those working in this field. One of the challenges, as highlighted by many of the panellists throughout the day’s sessions, is the translation of NDC ‘ideas’ into bankable projects with realistic costings that are able to attract funding. Related to this, the second challenge is a lack of technical expertise, for example in carrying out investment planning so that projects can attract venture capital and other forms of financing in their early stages. The third main challenge is how to access sizeable funds within multilateral development banks that are not specifically assigned to climate change projects, yet could play a significant role in financing low emission development strategies.
There were many different solutions shared and discussed by the workshop participants, both in formal panel discussions and informal table conversations. Firstly, political engagement and stakeholder participation was noted to be key for ensuring buy-in at the highest level. Africa LEDS Partnership speakers Dr Charles Mutai and Bright Ntare spoke of their national climate change funds in Kenya and Rwanda, respectively, which allow for the streamlining of climate change activities with development planning. Within governments themselves, there is also a need for cross-sectoral strategies that can create opportunities for new institutional arrangements to access funds from multilateral development banks, such as renewable energy and sustainable transport projects. In terms of the public-private nexus, the vast majority of climate finance in Africa comes from the private sector. Therefore, there is a real need to start leveraging private finance to grow the amount of public financing offered. Another suggestion put forward by UNDP’s Faris Khader was the importance of de-risking investments, especially those within the renewable energy sector, to attract more public finance.
Ideas were gathered for the LEDS GP’s Finance Working Group on proposals around unlocking more climate finance by 2020, and how the Working Group can better support the specific needs of Africa LEDS Partnership members, which will likely be addressed in a finance training session later this year. Some of these needs included assistance with MRV mechanisms, developing project proposals and business plans and, in general, building climate finance readiness through a more in-depth understanding of the climate finance instruments and funds available.
You can join LEDS GP here; membership is free and open to individuals and organizations, so please do consider joining our growing network!