Ahead of crucial climate talks at COP26 in Glasgow, Scotland, experts gathered to put forward solutions for building resilience in Africa.
This issue took center stage at a virtual briefing dubbed Africa-Europe Dialogue on African Climate Finance Priorities for COP26, organized by the South African Institute of International Affairs (SAIIA) in partnership with Konrad Adenauer Stiftung. The October 25 event sought to gather views from African and European climate stakeholders on opportunities for achieving climate resilience.
These discussions will inform African Development Bank activities at COP26, in particular a session on East Africa, a region that has been hit hard by the impact of climate change.
Olivia Rumble, Director of the South Africa-based Climate Legal, said the Covid-19 pandemic drastically impacted climate financing.
"Most of the climate financing in adaptation is happening from national budgets and that jeopardizes the already dwindling resources that African countries have to deal with adaptation because very little financing goes to addressing the issue," she said.
Olufunso Somorin, the African Development Bank's expert for Climate Change and Green Growth, noted that there was a huge disparity between mitigation and adaptation finance, even though the latter should be a priority for Africa because of its vulnerability to climate change. He attributed the financing gap to the fact that there was no specific adaptation financing framework.
Somorin said between 2014 and 2018, 57% of adaptation finance in sub-Saharan Africa was through loans while 42% was through grants, mainly to support just two sectors: agriculture, and water supply and sanitation.
"We haven't explored opportunities in equities, guarantees and other innovative financial instruments. This is very limited," he said, adding that the adaptation financing framework should also include different sources of financing as most grants and loans were external, yet there was room for tapping into domestic resources.
"There is an opportunity to expand our thinking beyond traditional multilateral development banks' support and bilateral climate funds to look into new areas such as private capital flows and domestic resources within countries," he urged.
Most Nationally Determined Contributions (NDCs) submitted by African countries list their adaptation projects. However, the business case for private investment falls short, Somorin said.
Other innovative products that offer opportunities to the continent include climate resilience bonds, debts for climate swaps, guarantees, risk-sharing facilities and equities.
The African Development Bank has committed to dedicating half of its climate finance to adaptation, and novel instruments such as green and resilience bonds have the potential to improve private finance flows.
According to Jonathan First, Managing Director of Cape Town-based climate consultancy GFA Climate and Infrastructure, there are several reasons why climate finance flow is limited in Africa, but one factor was key. "We are not creating a bankable pipeline of infrastructure for both concessional funders and the private sector to invest in," he said.
Stefano Signore, Head of Unit at European Commission agreed. He noted that there was a demand for supporting adaptation, but the lack of bankable projects poses a big challenge. "Everybody recognizes and understands that adaptation is a priority; what is missing is the sufficient number of bankable projects," he said, adding: "There is the capacity to support financially those kinds of projects, but they are not enough."
African Development Bank climate change specialists will gather on the sidelines of COP26 to champion climate adaptation in East Africa and discuss opportunities for mobilizing resources to support the cause.
The November 8 event, hosted by the Bank and partners, will make a case for a comprehensive adaptation financing framework that responds to the multiple climate risks directly impacting the economic and social systems of the highly vulnerable region.
Find out more here about the Bank's activities at COP26.
