The report offers a vision of climate finance’s future. (Image source: Adobe Stock)
A new report by Climate Policy Initiative (CPI) has revealed that climate finance flows into Africa are far below what is required to meet the continent’s climate adaption and mitigation needs
The ‘Landscape of Climate Finance in Africa 2024’ report, commissioned by FSD Africa, sets out these damning findings that could lead to potentially catastrophic social and economic implications. According to the research, there was actually a 48% growth of climate finance to the continent in 2021/2022 from 2019/2020. This saw climate finance reach US$44bn, with private sector finance also doubling to reach US$8bn.
However, despite this move in the right direction, the research indicated that this is simply not enough, with a grave financing gap threatening Africa’s long-term sustainable development trajectory. Key findings from the report include:
• Climate finance was only 23% of the estimated finance required annually for countries to implement their NDCs and meet their 2030 climate goals;
• Finance from domestic actors made up only 10% of total climate finance and funding from African governments remains in decline (from US$1.bn in 2019/020 to US$1bn in 2021/2022);
• There is a huge regional imbalance in flow with the top ten countries receiving 50% of total finance and the bottom 30 receiving just 10%;
• Private finance comprises only 18% of total climate flows;
• Half of all private finance goes to South Africa, Egypt and Nigeria.
Rate of growth "too slow"
“Climate change has the potential to cause Africa major and unprecedented economic disruption and reverse gains made in the recent past,” said Mark Napier, chief executive officer of FSD Africa. “To counter all actors must invest in a more sustainable future. Climate finance is the key element which will determine Africa’s ability to adapt to, mitigate, and develop through, a changing climate. This report by the CPI provides policymakers and decision makers on the continent with a survey of the climate finance landscape as it is now, and as it can – and must – develop in the future.”
In order to do so, the report also provides recommendations to address the gap and accelerate funding such as:
• Establishing an ambitious enabling environment to mobilise capital;
• Strengthening coordination between investors and development financiers to scale-up private sector investment through concessional resources;
• Maximising the impact of mitigation and adaptation investments by stronger integration of climate and development objectives into national policy development and long-term strategies.
• Seeking out and investing in the numerous business opportunities for green, resilient growth in Africa, taking advantage of growing pools of concessional finance and guarantees, while integrating climate risk management from the outset into decision-making.
“It is encouraging to see more climate finance flows in Africa, but the rate of growth is too slow,” surmised Barbara Buchner, global managing director of Climate Policy Initiative. “Public policy and investment must be targeted effectively, and private capital, both domestic and international, can no longer sit on the sidelines. Otherwise, the significant economic opportunities currently available across the continent will be overshadowed by severe economic losses and catastrophic social consequences.”
