Africa needs $2.7 trillion by 2030 to combat climate change

Africa currently requires approximately $2.7 trillion by 2030, an equivalent to $400 billion annually, to effectively combat climate change, according to a projection by the African Economic Outlook (AEO) Report.

The AEO Report is the product of close collaboration between the African Development Bank (AfDB), the centre for Organization for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP).

The report bridges a critical knowledge gap on the diverse socio-economic realities of African economies through regular, rigorous, and comparative analysis. It provides short-to-medium term forecasts on the evolution of key macroeconomic indicators for all 54 regional member countries, as well as analysis on the state of socio-economic challenges and progress made in each country.

Climate change remains a growing threat to lives and livelihoods in Africa.  It has resulted in extreme weather events, which disproportionately affect the continent, with severe economic, social, and environmental consequences for its people.

The report was made public at a high-level dialogue on innovative climate finance solutions for Africa on the sidelines of COP29, the United Nations (UN) global climate conference currently underway in Baku, Azerbaijan.

Hosted at the Multilateral Development Banks’ Joint Pavilion, the event brought together prominent decision-makers from governments, fund coordinators, private sector leaders, philanthropies, and civil society organizations. Discussions emphasized the urgent need for increased climate finance contributions and stronger partnerships.

Who said what?

AfDB’s Vice President Kevin Kariuki, the Bank’s Manager for Climate and Environment Finance, Gareth Phillips, outlined Africa’s significant financing gap at the meeting.

Despite the huge financial gap, according to them, Africa received just $47 billion in 2022, accounting for only 3.6% of global climate finance. “While the Bank’s record $5.8 billion investment in climate adaptation and mitigation last year marks progress, it remains insufficient. We must dramatically accelerate our efforts to mobilize climate finance,” they added.

The Bank’s representatives also showcased several ambitious initiatives to bridge this gap, including establishing Green Banks, expanding support through the Climate Action Window, creating new revenue streams for adaptation actions through the Adaptation Benefits Mechanism, the African Adaptation Acceleration Programme, and increasing focus on carbon markets, nature-based solutions and biodiversity conservation.

While addressing the meeting, the Chief Executive Officer (CEO) of Climate Investment Funds (CIF), Madame Tariye Gbadegesin, underscored the organization’s catalytic role in scaling solutions.

“CIF helps Multilateral Development Banks innovate and address complex, high-risk areas. With over $12 billion in funding supporting nearly 400 projects in more than 80 low- and middle-income countries, our work spans renewable energy, nature-based solutions, and the coal transition. With its unique vulnerabilities and immense potential, Africa stands at the forefront of the climate change challenge,” she said.

Similarly, the Regional Director for Africa, UN Office for Project Services (UNOPS), Ms. Dalila Goncalves emphasized the pivotal role of non-financial institutions, like UNOPS, in facilitating effective utilization of climate finance, especially in fragile and high-risk environments.

The dialogue also featured insights from Mr. Vomic Nur Shah, Global Head of Origination of the United Kingdom (UK) Export Finance, who stressed the importance of collective action and explained how sustainable economic growth in Africa can be accelerated by complementing the private market investments with insurances, loan guarantees and various other financial instruments and incentives.

As part of the event, two key publications were presented to participants; “Climate Finance Matters 2024” on various funding options for climate action within the Bank and the guide “Understanding Power Project Financing, which was developed in collaboration with USAID. These resources will guide stakeholders in navigating climate finance opportunities and scaling impactful projects.

The dialogue concluded with a strong call for action, urging stakeholders to accelerate collaborative efforts and investments to close Africa’s significant climate finance gap.