What Can Climate Finance Do for Africa?

From World Bank, African countries need to raise $1.6 trillion between 2022 and 2030 to meet their nationally defined contributions to combating climate change, but they have only raise $18.3 billion to date. Any alternative?

And we start with a bit of breaking news on international business news boris johnson is expected to resign as leader of britain’s conservative party paving way for his exit as prime minister now this comes as the pound has sunk to a two-year low against the dollar as the uk government faces colossal disruptions from a series of resignations by senior conservatives

After the sudden resignation of exchange tsunak and health secretary sajid javid the pound registered a decline of 1.4 percent the drop came on the bank of an earlier drop of the pound dollar pair that fell as much as 1.8 percent the lowest since march 2020. the pound remains the third worst performing major currency this year having weakened by 8 percent in the

First six months of 2022. germany’s industrial production grew less than expected in may now data from destetist has shown that industrial production grew 0.2 in may from april when output was up by a revised 1.3 percent output was expected to climb 0.4 excluding energy and construction industrial production was up 0.6 within industry capital goods production

Gained 2.2 percent while outputs of consumer goods and intermediate goods fell 0.9 and 0.4 percent on a yearly basis industrial output declined 1.5 percent after easing 2.5 in april japan’s leading index declined in may after improving on the previous two months now preliminary data from the cabinet office shows that the leading index which measures future

Economic activity dropped to 101.4 in may from april’s four-month high of 102.9 the index that measures the current economic situation also weakened to 95.5 in may from a stable reading of 96.8 the previous month the lagging index declined to 95.9 in may from 96.4 in april this was the first fall in four months and staying in asia china’s steel meals are sounding

The alarm over crisis conditions in the industry as margins plunge due to weak demand the starkest warning yet has come from hunan valen iron and steel group which met this week to discuss the rapid downturn in the sector and the measures it needs to take to ensure the company’s survival including halting unprofitable production citing industry experts the mill

Based in southern china said it expects the crisis to persist for five years other mills in the northwest and southwest of the country have pledged to reduce output as they wait on infrastructure spending to revive steel demand the steel industries purchasing managers index for june recorded its worst reading in a decade last week you’re watching business edge

Our next conversation is asking the question what can climate finance do for africa my guest is ready to join the conversation a senior african development bank executive said on wednesday that wealthy nations and international financial institutions need to invest more money in africa in order to assist global climate goals by discouraging carbon intensive

Development in the continent according to the bank’s vice president kevin o’rama the regional development lender is asking the international monetary fund for new special drawing rights that would be used to fund climate resilience he urged wealthy nations to reallocate more of the imf’s reserve currency for africa’s climate finance noting that only five percent

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Of sdrs flow to african nations a recent analysis by the world bank shows that african countries need to raise 1.6 trillion dollars by 2030 to meet their nationally defined contributions to combating climate change but they have only received 18.3 billion dollars to date now joining me is dr pindili masa ghani and she’s the ceo of petroleum agency south africa

And we’re going to get into this conversation around climate financing welcome to business edge thank you so much for joining me thank you for inviting the petroleum agency sa thank you very much for the time so a lot of us have heard this terminology climate finance climate finance but many of us really don’t understand the background and what it really means

So let’s start with that establishing what exactly is climate finance it is as you said in your introductory remarks part of the unfcc framework looking at how can we assist countries to transition to a clean energy future so it is about developed countries as well as funding institutions putting together funding to assist countries to use cleaner technologies

Whether it’s in energy or it’s in other sectors both as mitigation measures but as well as just avoiding adaptation measures to make sure that they can be resilient towards climate change so as really the latest catchphrase i think i see it’s about once or twice a week these days in headlines but beyond that have we really seen any climate finance deals that

Have really taken off and have done what they’re supposed to do or at least are showing us the true potential of this new sort of age in energy and of course climate issues um south africa itself is in a process currently of negotiating 8.5 billion dollar climate change funding for our country so we have senate but largely and i think that’s the reason probably

Why you invited me here what we’ve seen most of the climate finance proposals coming through they are geared towards electricity production and specifically they are targeting the renewable energy technologies and i think what is very important for africa um to have to bear in mind and for the international community to also be in mind is that africa is not just

Facing a climate change issue but it’s also facing of course an economic development issue as you know we’re very behind in terms of economic development so there in comes the link between our climate change as well as our economic development imperatives so what we are saying as leaders in africa is that the the climate change funding should not just target

Only renewable energy technologies because we know that gas for example will also help the continent to transition to a cleaner energy future so there are a lot of people involved in this south african deal this negotiation you’ve mentioned and a lot of us have our eyes on it because we believe it could be a template for climate financing deals um into the

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Future but the question also remains this is the fourth industrial revolution the countries that are willing to pay africa to sort of change what we’re doing or stop using coal or maybe even move away from gas even though it’s been designated as a green energy had all the years to use all the dirty fossil fuels for their own development so is there a continuing

Conversation about africa being able to use its natural resources that we have an abundance of for that same level of development that the west is now trying to move away from you are correct in that um the template the negotiation or the deal that south africa will conclude on climate finance will such a template for the rest of the continent and that’s why for us

It’s very very important that it does not set the wrong tone in terms of financing for the african continent yes africa is behind in terms of development and other countries are now um well into the fourth industrial revolution where else we are very behind basic infrastructure is not in place as you know more than 600 million africans do not have access to clean

Efficient energy supply many of our people still rely on deforestation so the basic issues must still be addressed and not just the most advanced so it’s not just a case of making sure that we adopt um the renewable energy technologies but how do we adopt them in a manner that still allows us to address the basics and therefore sets us on a firm footing to also

Participate in the fourth industrial revolution as you already said yourself that for example gas helps us to to to one and lower our emissions as a region but importantly it helps us to reindustrialize so gas as an energy source allows us to straddle the two imperatives of transitioning to a cleaner energy future while re-industrializing while re-industrializing

The continent and therefore setting africa growth so it’s very very important that we do not make the climate finance synonymous with certain energy technologies but rather we should make it synonymous with broadly a a transition to a clear clean energy future but importantly we should also make it synonymous with economic development lastly what we are seeing

On the african continent of course is that we are blessed with a renewable energy resource but currently most of the ip most of the manufacturing is not yet localized in africa so you can see already that if we take those technologies too early again africa will become a consumer of those technologies and not a strategic plan so a recent african development bank

Report is asking that the imf redirect the special drawing rights towards africa’s climate financing and it sounds like a good idea but even on a regular basis we’re struggling with getting the special drawing right to really uh be directed towards the continents we need approval by all of those who are part of the conversation so if that was to happen how do

You think it would really work if the imf was to go with the afdb’s proposal i think that’s where we need to sharpen our skills in terms of negotiation one for me it’s not just about the availability of the fund but it’s also to make sure that the other imperatives of the african continent are addressed lastly it’s to make sure that our policy makers are sitting

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On the table so that they can put on the table how we can make the accessing to these funds easier the international energy africa’s the international energy the international energy agency’s report on the african energy outlook makes it clear that this is a decade of transformation for africa and therefore the time is limited and we’ve got to make sure that

Those funding um structures are not just there but there are mechanisms in place to make sure that they can be quickly accessed and that project can be implemented as quickly as possible all right so my final question as we all have our eyes on south africa in terms of leading this way with this climate financing deal gabon is sneaking up and i found it really

Interesting gabon is planning the world’s biggest ever carbon credits issue 90 million will be sold and non-market mechanisms will be used for the balance and there seems to be options available to african countries when it does come to climate finance so with south africa having this negotiation around coal gabon having the conversation around its carbon credits

What should we expect what more can africa do around climate financing so in terms of financing projects that help us to be more climate resilient and also mitigates the impact of climate change there are a number of funding institute instruments so the issue of carbon credits for example is one i know that the carbon market a few years ago had crashed but it’s

Now back up and therefore different countries may choose different mechanisms so you can access the funding that has been set up by multilateral institutions you can set up a domestic carbon credit financing where other countries can buy the carbon kept credits from your country and of course it’s allowed to also use h1 strategy or even multiple strategies on

How you finance your climate change mitigation project all right dr masanggani thank you so much ceo of the petroleum agency south africa thank you for joining me on business edge thank you and it’s a conversation that will not end anytime soon african countries are expected to mobilize as i said earlier 1.6 trillion dollars between 2022 and 2030. but so far

We’ve only seen what 18.2 billion dollars and we’re starting to hear the word stagflation many economies are also recovering from covid and then you add the pressures of the russia-ukraine conflict it becomes quite questionable if we’ll be able to raise the money and western countries will likely not prioritize climate issues on the continent and the continent

Has gotten the short end of the stick for a number of years can that change and one thing i take away from my guests africa needs to sharpen its negotiation skills when it comes to these issues you’re watching business edge we’re talking fintechs and financial inclusion after the break

Transcribed from video
What Can Climate Finance Do for Africa? By News Central TV