African financiers have outlined how the recent pandemic, COVID-19, and the challenges of the climate crisis have provided opportunities to transform the continent.
Speaking at an event organised by Moody's, the influential world credit rating agency, on the sidelines of the Africa Development Bank Annual Meetings in Nairobi they concluded that Africa has great potential to build resilient and successful economies despite the climate crisis which has already led to extreme weather conditions across the continent.
The island of Mauritius sits at risk of rising sea levels and has recently experienced flash floods that have impacted its coastal areas. The Governor of the Bank of Mauritius Harvesh Seegolam described how that island has moved quickly to put in place a climate mitigation and adaption strategy.
"Even though it is estimated that Mauritius has only contributed about 0.01% of green-house emissions we are one of the world's most exposed countries to the climate crisis. We require $7.6 billion for that strategy to succeed. 36% will be financed by our government but the private sector and external funding will be required for the rest," he stated.
Seegolam stressed that the key was to make Mauritius attractive to the private sector and international investors to encourage them to invest in bankable climate projects. Mauritius has issued Green and Blue Bonds and has created a set of key enablers to make it a reliable destination for funding.
He added: "We need good governance and ease of doing business so global investors are comfortable to come in, we need African countries to come together to share best practice and we need to discuss how Africa can up its game. The pandemic presented us with opportunities to rethink and restructure our economy and now we're reaping the benefit of that."
The Head of Research at the Central Bank of Kenya, Professor Robert Mudida, tells a similar story. Kenya has also been facing extreme weather events: floods, droughts, mud slides.
"Kenyan agriculture had 7% growth this year but in the two previous years we experienced the worst drought since the 1990s. Climate finance is the key to transformation. That's why Kenya has been an early adopter to factor in climate-related risk to our models. We need to address these issues as we look at global financial transformation," he told the meeting.
Prof Mudida says public-private partnerships are important to attracting investors and developing an export-driven economy. He said that at present Kenya exports around 40% of its goods and services and aims to be a strong exporter not just regionally but globally. He added that SMEs are critical to that objective and are essential to Kenya's growth agenda.
The event was hosted by Moody's Vice President David Roderick.
Moody's Analytics is a long-standing provider of credit risk solutions to Africa. It publishes credit ratings and provides assessment services on a wide range of debt obligations. Moody's outlook for emerging markets remains cautiously optimistic with GDP growth and slowing inflation.
Moody's Analyst Lucie Villa described Africa's transformation as a "challenge and an opportunity". She concluded that with climate resilience and inclusive growth 2024 could be the year Africa builds resilient economies, noting:
"It's good to look back and see what's worked well. Policy coordination between central banks and Finance Ministers is crucial so that when the next shock comes we can say that Africa is better prepared."
