The African Private Sector Capital Association (AVCA) and the Tony Blair Institute for Global Change (TBI) on Wednesday released their joint “Climate Financing in Africa: Strategies for the Future” report. This examined the climate resilience investment landscape across the continent, including who and what the investors were, and what investment strategies were being employed.
Among other findings, the report highlighted that currently most climate funding in Africa was from the public sector. Climate funding inflows during 2019/20 came to $6.7-billion from governments, $16.9-billion from development finance institutions and development aid agencies, but only $3.4-billion from the private sector.
Currently, African countries prioritised spending on greenhouse gas emissions reductions, not on extreme weather event defence mechanisms. This was despite the fact that the continent was amongst the most vulnerable areas regarding climate change-induced extreme weather. The report concluded that, in future, climate mitigation should receive 66% of Africa’s climate financing, while adaptation should get 24% and 10% should be assigned to joint mitigation/adaptation solutions.
The report also found that there were three major factors which hampered green investments in Africa. The first of these was the existence of gaps in institutional governance. “[C]onflicting mandates between national institutions and climate agencies, combined with weak regulatory framework[s] have led to a limited capacity to design bankable projects and monitor climate change dynamics, and a lack of mechanisms to coordinate climate change action plans,” stated AVCA and TBI.
The second major factor was the lack of modelling data for climate change across Africa. Only 3.8% of climate change research covered the continent, and only 0.55% of that research was carried out in, or with, African research institutions. This lack of data hampered both government policy formation and the participation of the private sector in climate finance.
The third major factor was the weakness of African financial sectors. The lack of development of most of the continent’s financial markets meant that there was a lack of climate finance architectures and instruments, like national climate funds and green banks. These were needed to underpin green finance and allow the leveraging of Africa’s resources.