Experts at the 2020 Global Philanthropy Forum on Tuesday called for greater collaboration among funders to address the severe threat that climate change poses to Africa’s development.
Participants highlighted the critical role of innovative approaches to mobilizing climate adaptation finance in Africa, in a session titled Inclusive Green Economies – Harnessing Opportunities and Innovative Solutions for Investments in Climate-Resilient Development in Africa.
The virtual session, oranised by the African Development Bank, began with a call for sustainable ways for the continent to emerge stronger from the pandemic. The event was moderated by Emily Ojoo-Massawa, Senior Associate at the Global Climate Adaptation Partnership.
“The path to a sustainable COVID-19 recovery will therefore require investments that simultaneously tackle the pandemic and prevailing climate risks while offering attractive co-benefits,” said Al Hamndou Dorsouma, Manager of Climate and Green Growth at the Bank.
“The moment for adaptation has come. Interestingly, we have the attention of philanthropy, private sector and non-traditional investors, who want to invest in harnessing new opportunities in climate change adaptation,” said Arame Tall, Senior Adaptation and Resilience Specialist, Climate Change Group at the World Bank. “We need the ministries of finance to be involved in outlining adaptation investment opportunities in countries to better harness these opportunities, including clear investment and sectoral plans.”
With less than 2% of philanthropic funding going to combat climate change, funders face a challenge. The solution is to collaborate more and in smarter ways in order to meet ambitious targets and rally support from all sectors, participants noted, drawing attention to the unprecedented challenge posed by the COVID-19 pandemic.
“Collaboration is important to lay a solid foundation to achieve a greener post-COVID future,” said Atsuko Toda, the African Development Bank’s Director for Agricultural Finance and Rural Infrastructure Development.
She called for a paradigm shift in adaptation financing, stressing the Bank’s willingness to work with partners to accelerate Africa’s adaptation.
In October 2018, the Bank’s Board of Directors approved a framework for the implementation of the Africa Disaster Risk Financing (ADRiFi) Programme, which offers regional member countries an opportunity to pool and transfer their climate-related risks by paying a sovereign insurance premium. “The payout is made immediately after a disaster happens,” Toda said. The Bank partners with the African Risk Capacity Insurance Company (ARC) to implement ADRiFi.
The COVID-19 crisis has underscored the urgency of building healthier, more inclusive and more resilient economies, the meeting heard.
Lesley Ndlovu, CEO of ARC, noted the need for countries to plan for exposures and build resilience. “At the African Risk Capacity, we work with countries to prepare them for the risk exposure they have and help them prepare for how to respond, including helping them to establish a rainy-day fund. We have also partnered with the African Development Bank for the Africa Disaster Risk Financing initiative and other financing instruments,” Ndlovu said.
“We need broader collaborations to solve the problem that our continent faces. The problem is so big that all of us have a role to play.”
Africa is among the world’s most climate-vulnerable regions, and the economic cost is high: as much as $15 billion in 2020, rising to potentially $50 billion by 2040, which is equivalent to 7% of the continent’s GDP.
Al Hamdou Doursouma noted that the Bank is on track to mobilize $25 billion between 2020 and 2025 to support investments in climate change.
In 2019, the African Development Bank prioritized adaptation finance, with 55% of its climate-focused financing invested in adaptation actions. The Bank’s adaptation finance rose from $500 million in 2012 to $2 billion in 2019, cumulatively representing $18.6 billion over this period.