A dearth of long-term green growth strategies is hindering African countries from attracting much-needed private investment in initiatives to counter and mitigate against climate change, according to the continent’s biggest multilateral lender.
(Bloomberg) — A dearth of long-term green growth strategies is hindering African countries from attracting much-needed private investment in initiatives to counter and mitigate against climate change, according to the continent’s biggest multilateral lender.
Only seven of the 55 African countries have long-term strategies and just 18 have “put in place policies and regulations specifically designed to attract private participation in green growth projects,” the African Development Bank said in a report released in the Egyptian city of Sharm El-Sheikh on Wednesday.
The continent, which is warming faster than the global average, needs between $234.5 billion and $250 billion annually to meet its climate action goals, as defined by their so-called Nationally Determined Contributions, which equates to between $2.6 trillion and $2.8 trillion by 2030, according to the report. Africa received just $29.5 billion in climate finance flows from 2019 to 2020, with private contributors accounting for 14% of the total — the lowest proportion of any region.
“Africa is being short-changed by climate finance,” Akinwumi Adesina, the bank’s president, said at the launch. “There’s a lot of work to do and private sector financing for climate will have to rise 36% annually” between now and 2030.
While Africa produces just 4% of the world’s greenhouse gas emissions, it is being hard hit by climate change and its response has been hamstrung by a lack of funds. In recent years, unusually strong cyclones have struck the southeast coast, droughts have parched East Africa and floods have destroyed infrastructure in South Africa and parts of the west of the continent.
Read more: How Global Warming Makes Extreme Weather More Likely: QuickTake
Green strategies would help lower Africa’s investment risk profile, but other barriers to it obtaining additional climate funding persist. Investors’ “perception of African markets as high risk has led to high costs of capital and high required rates of return,” while some have limited operating experience on the continent, which may affect their decision to commit funds, the report said.
The report singled out the electric vehicle market as offering trillion-dollar opportunities for private investors due to the continent’s wealth of resources in critical minerals such as lithium, cobalt, nickel, manganese, graphite, iron and phosphates. With demand growing for climate-smart and agricultural technologies, the agriculture and agribusiness sectors could also become a $1 trillion market by 2030, it said.
–With assistance from Abdel Latif Wahba.
(Updates with bank president’s quote in fourth paragraph)
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