The World Bank underscores that every dollar spent on climate adaptation generates a fourfold economic benefit, emphasizing the significance of investing in climate solutions. Simultaneously, the African Development Bank (AfDB) estimates that Africa requires $250 billion annually for climate finance, indicating that climate spending is crucial not just for the environment but also for economic growth.
Despite this, Africa only receives 12 percent of the necessary $250 billion yearly, with just two percent available for spending, creating a substantial funding gap hindering climate action in the continent. Past commitments like the Copenhagen Accord aimed to mobilize $100 billion annually by 2020 for climate action in developing countries but haven’t sufficed.
To address this challenge, a new working group aims to strengthen African financial institutions’ capacity for financing climate action. Bringing together experts from diverse fields, the group seeks to devise innovative solutions and share expertise.
AADFI-ADFIAP, through this initiative, aims to proactively tackle climate challenges by identifying funding opportunities, collaborating with AFAC, and aiding African countries in meeting their climate goals through a dedicated roadmap. The group will provide technical aid and capacity building to ensure effective climate action financing.
Economist Michael Ma’hmoud highlighted the need for sustainable strategies in Development Financing Institutions (DFIs) to avoid past failures and ensure long-term success. He stressed the importance of sustainability in mobilizing resources for development.
Zeph Nhleko, Chief Economist at the Development Bank of Southern Africa, stressed the necessity of additional capital for climate financing. He suggested leveraging innovative models like green bonds and blended finance, emphasizing the importance of collaboration among DFIs, governments, and the private sector to advance climate action.
Overall, Nhleko emphasized the urgency of more resources and enhanced coordination to support climate change financing initiatives in Africa.
