December 23, 2021

Africa Cannot Confront Climate Change Alone


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Despite having played a negligible role in creating the climate crisis, African countries already find themselves paying the price for it. More creative and proactive forms of international support are needed to help African countries both adapt and maintain progress toward broader sustainable development goals.

KINSHASA – Africa contributes almost nothing to global warming. Its 1.4 billion people – around 17% of the global population – are responsible for less than 3% of the world’s total greenhouse-gas emissions. Moreover, data suggest that the forests of the Congo River Basin alone absorb 3% of global carbon-dioxide emissions every year.

Nonetheless, Africa finds itself on the front lines of the impact of climate change. The continent is already contending with more frequent climate-related disasters, hotter weather, erratic rainfall, and rising sea levels, all of which bring human tragedy, social upheaval, and economic disruption. For example, with each new drought, annual per capita growth over the medium term can decline by a percentage point.

Like countries everywhere, policymakers in Africa must embrace the inevitable global transition to a low-carbon economy. In addition to pursuing economic programs to raise living standards, they urgently need to build resilience against climate shocks, especially in countries that depend on rain-fed agriculture. That is why the African Union has endorsed the Africa Adaptation Acceleration Plan, which calls for investments in resilient infrastructure, climate-adaptive agriculture, digitalization, trade reforms, and a broadening of safety nets. Not only are these measures up to 12 times more cost-effective than disaster relief; they also will generate jobs, raise incomes, and improve living standards.

But the price tag for climate action is large, and it comes on top of what is required to meet the Sustainable Development Goals. At last month’s COP26 climate-change summit, African leaders indicated that the region would need $1.3 trillion over the next two decades for climate adaptation and mitigation. The required sums are out of reach for African countries, especially now that the COVID-19 pandemic has driven up debt levels and constrained growth. Efforts by the international community have so far fallen short.

We need new ideas and new approaches. First, grant and concessional financing must be used more effectively. Multilateral climate funds, development banks, and other providers should look for opportunities to streamline project approvals (while maintaining safeguards) to get money flowing faster to where it is needed. Well-targeted interventions that unblock bottlenecks or redress market failures also can help crowd in private-sector funding. For example, increased digital connectivity lays the groundwork for entrepreneurs to provide crop insurance, weather services, or real-time agricultural advice. Second, we need to expand new financing mechanisms across the public and private sectors. Green bonds can help finance climate-related initiatives at comparatively low rates, but Africa trails other regions in this crucial area. From 2007 to 2018, the region accounted for only around $2 billion in issuances – just 0.4% of the global market for green bonds.

Elsewhere, new programs are connecting finance directly to climate action. The United Kingdom recently agreed to provide $500 million to the Democratic Republic of Congo (DRC) to curb forest loss. Norway has a similar agreement with Gabon for $150 million. A related idea is “debt-for-climate swaps.” Linking debt relief to climate action will require a large pool of swappable debt as well as standardized performance indicators and other related data.

Third, we should recognize that helping African governments access new sources of capital – including innovations in climate finance – depends heavily on reducing their credit- and country-risk profiles. On the domestic side, this means improving governance – especially through reforms in the procurement and management of public investment, public finances, and debt – and ensuring carefully costed and fiscally sustainable investment plans.

The International Monetary Fund is already playing an important role in helping national governments build their capacity to address climate challenges (the DRC is one of the first recipients of the IMF’s support for climate-focused capacity development). And through the Fund’s Article IV surveillance, investors remain apprised of countries’ progress in implementing climate adaptation measures.

On the international side, standardized measures – such as a system of first-loss guarantees – could help to improve risk profiles and catalyze private financial flows. Careful design would be needed to ensure appropriate risk-sharing across the public and private sectors. One promising model is the Seychelles’ $15 million “blue bond” issuance in 2018. Guaranteed by the World Bank, this instrument both finances ocean-based projects and, thanks to a reduced interest rate, helps to lower the national debt.

While these examples show what is possible, far more comprehensive action is needed across the African continent. Business as usual will result in massive disruptions to lives and livelihoods, whereas properly designed, well-financed adaptation can ensure that development continues, and that people are equipped to live, work, and prosper in the new climate economy.

Fortunately, there is a new global willingness to address the climate crisis and seize climate-related opportunities. COP26 resulted in new global agreements on tough issues like coal and energy subsidies, and generated bespoke deals such as the $8.5 billion mix of grants and cheap loans to help South Africa decarbonize its economy.

Moreover, following the recent $650 billion allocation of new special drawing rights (the IMF’s unit of account), the Fund has a green light to establish a new Resilience and Sustainability Trust. This facility will provide affordable, longer-maturity financing for poor and vulnerable middle-income members and small states undertaking structural reforms to transform their economies and address climate risks.

The signs are promising. But, as the saying goes, “One swallow does not make a summer.” To tackle the climate crisis in Africa and put the continent on a new sustainable growth trajectory requires concerted efforts across national governments, the private sector, and the international community.

Time is not on our side. We must all act now to make the most of it.

Kristalina Georgieva is Managing Director of the International Monetary Fund.

Félix Tshisekedi is President of the Democratic Republic of the Congo.

The text has been adapted from Project Syndicate website

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