For African Countries Looking to Meet Adaptation Targets, Innovative Financing Is Key
This week, representatives from around the world are meeting in Ghana for Africa Climate Week 2019, where they are demonstrating that the international community is serious about meeting the climate action challenges before us. Although African countries have defined national climate goals, a lack of financing remains a major obstacle for their achievement, particularly for climate adaptation.
This is in large part because adaptation finance thus far has lacked convincing business cases to attract private sector engagement. The reality is that there is not sufficient and accurate evidence that adaption projects, in the way the majority have been structured to date, can offer returns-on-investment that compel most financiers to action.
When coupled with other policy challenges across Africa – including addressing limited legal frameworks and enforcement, a desire for stronger and more inclusive climate change governance mechanisms, and a necessity to translate climate objectives into national and sectoral strategies and investments – and capacity constraints, the need for support only grows more urgent.
Despite these barriers though, there is progress underway. In Africa, many NDC Partnership member countries, including Uganda, Mali, Morocco, and Congo-Brazzaville, have begun compiling adaptation initiatives into bigger investment packages, as part of their NDC Partnership Plans. This helps ensure that the critical but less lucrative projects get funded alongside mitigation projects and those with a more attractive return on investment.
In Kenya, for example, the African Development Bank provided partial risk guarantee financing to mitigate the transmission delay for the Turkana Wind project, the largest in Africa. Access to energy is a primary enabler in strengthening communities’ adaptive capacity. In Mali and Morocco, water access and renewable energy projects are also being developed and promoted to multilateral and national development banks, sold as green bonds and pitched to private sector investors. And, in Brazzaville, a flood and stormwater management master plan, accounting for climate change projections over various time horizons, will be developed through the Adapt’Action facility financed by the French Development Agency (AFD).
Governments are also demonstrating strong commitments to uphold the principles of the Paris Agreement by making domestic resources accessible while, at the same time, reducing investor risks through climate legal frameworks to ensure climate action is a crucial part of a country’s national policies backed by enforced regulations. And, countries are finding creative ways of closing market inefficiencies through environmental levies on infringing pollution or deforestation activities, reinvesting this revenue back into more climate smart projects.
As the world now gathers in Accra, we must make sure that finding new and innovative ways to finance adaptation is a major topic of discussion. While the NDCs often reflect national development priorities, their lack of detail and results-oriented structure can make it difficult to assess actual needs and attract investors.
The NDC Partnership, including our organizations – the African Development Bank and the French Development Agency (AFD) through the Adapt’Action facility – is committed to raising this important point. That is why on Friday 22 March from 11:00-12:30 we are hosting a joint event at Africa Climate Week on “Financing Adaptation through NDCs.”
The event will provide a better understanding of the main obstacles and challenges faced by countries and explore various experiences to identify mechanisms to attract finance for climate adaptation and propose solutions to accelerate action. By sharing the knowledge that has been gained by a wide variety of stakeholders – including African countries, international development organizations, development partners, international institutions, national banks, and the private sector – we can continue the progress that has been started and work to clear the imminent hurdles that slow our efforts.
This blog was written by Julie Gonnet, Adapt’Action Project Manager at the French Development Agency (AFD), and Davinah Milenge Uwella, Senior Environment and Climate Change Officer at the African Development Bank.