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New capital, meet new ideas
A green transition in Africa relies on bringing together wallets and brains. We explore how it’s playing out so far.
Green Rising
August 29, 2023
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⏳ Today’s reading time: 5 mins
LOGISTICS UPDATE | Tuesday 29 August
Countdown: The Africa Climate Summit starts in 6 days (Sept 4th)
Agenda: Organising an off-venue event? Email us details to share
AND FYI…
🌆 Other event: The Africa Youth Assembly runs from Sep 1-3 in Nairobi
🛑 Traffic alert: Beware of a first day demo near the climate summit
🥗 Natural food & dining: Vegans seeking organic feed frequent Ethos
1.🚁 Heli view: Radical new financing
The International Finance Corporation (IFC) invested $11.5 billion in Africa's green transition in the past financial year, so it said this week. Is that a lot?
The IFC declared it amounts to "the largest ever annual commitment for the continent".
World Bank tables show it equivalent to the GDP of Equatorial Guinea.
The backdrop: Many multilateral development banks have shifted focus to the climate sector. The IFC says 40% of its "own account financing is dedicated to addressing climate change".
But in private a number of leading experts say that investment in Africa's green economy would need to exceed current development budgets (collectively about $200 billion per year) at least tenfold to be effective for the climate in the longer term.
Reality check: Given the state of public finances in the Global North, from Washington via London to Beijing, growth in public financing for Africa initiatives will be limited.
At the climate summit: According to briefing documents being circulated, African leaders meeting in Nairobi next week will be calling for:
"A pathway to a new global financial deal that includes 6-8 at scale financing instruments to be delivered by DFIs, MDBs and private financiers".
They are also calling for "specific investment commitments (multi-billion dollars worth) across all sectors (energy, industry, nature, etc)".
New ways of financing: Africa is proposing even more in terms of climate finance. Soipan Tuiya, Kenya's Cabinet Secretary for the environment, said:
"We are suggesting a new financial architecture, one that is just, inclusive and democratic."
"We seek new global instruments to make polluters pay more and hence to mobilise investment."
"We are proposing a global fossil fuel tax and a global aviation tax."
Big ideas: To call this radical is no overstatement. Global taxation is hard not just ideologically but also logistically. Still, Mrs Tuiya, who is a key organiser of the climate summit, is offering solutions. She says: