Monday, September 26, 2022

Economic Outlook 2022:  AfDB, IMF Harp On Climate Financing For Africa

…Say Africa needs $1.6tn to meet NDCs

 

Panel AfDB IMF
The director, African Department, International Monetary Fund (IMF), Abebe Selassie; Deputy director, African department, IMF, Cathy Pattillo; Acting chief economist and vice president, African Development Bank, Prof. Kevin Urama, and Assistant director, fiscal affairs department and climate change policy coordinator, IMF, James Roaf during a panel discussion on the 2022 African Economic Outlook in Washington DC, USA.

In the wake of the rising negative impacts of climate change, experts from the African Development Bank (AfDB) and the International Monetary Fund (IMF) have stressed the urgency of mobilising climate financing for Africa.

They made this assertion during a panel discussion on the African Development Bank’s 2022 African Economic Outlook hosted by the IMF in Washington DC on Monday (July 25, 2022), themed “2022 African Economic Outlook: Supporting climate resilience and a just energy transition in Africa”, highlights climate change as a growing threat to lives and livelihoods in Africa.  

The panel comprised the acting chief economist and vice-president, AfDB, Prof. Kevin Urama; IMF’s assistant director, fiscal affairs department and climate change policy coordinator, James Roaf and acting manager of the African Development Bank’s macro-economic policy, debt sustainability and forecasting division, Anthony Simpasa. It was moderated by the deputy director of IMF’s Africa department, Cathy Pattillo. 

Addressing participants, the experts posited that African countries need to mobilise $1.6 trillion between 2022 and 2030 to meet their Nationally Determined Contributions (NDCs) to fight climate change. So far, they have only received $18.3 billion annually, leaving a financing gap of $108 billion annually. With current trends, Africa’s NDCs will not be achieved.

In his presentation, Urama noted that Africa has huge comparative advantages to lead the world in this new green transition, but lacks the capital to do so.

He emphasised that the findings of the 2022 African Economic Outlook show that the structure of climate finance is very complicated and creates a misallocation of resources.

As a result, the main objective of climate finance – to support climate-vulnerable countries – is not being achieved.

“One fundamental, existential issue for Africa is climate change. The countries that are receiving climate financing are the less vulnerable ones,” Urama noted. 

Urama Abebe
L-R: The acting chief economist and vice president, African Development Bank, Prof. Kevin Urama and the director, African Department, International Monetary Fund, Abebe Selassie.

In his remarks, the director of the African Department at IMF, Abebe Selassie, observed that African policymakers face the unenviable task of needing to invest trillions of dollars in important energy transition that the region needs to advance its development.

“At the same time, they are being asked to think about the adverse effect that this may have on climate change, but advanced countries who benefitted from climate unfriendly policies are unwilling to support development in the region. This is one issue that policymakers raise with us when we engage with them on the financing challenges they face,” he said.

Selassie described the findings of the 2022 African Economic Outlook as “sobering”, observing that “it raised some profound issues.”

IMF’s assistant director in the fiscal affairs department and climate change policy coordinator, James Roaf identifiedadaptation as the biggest issue for Africa.

“The African Economic Outlook rightly stresses the need to integrate climate objectives in overall sustainable development pathways. We need to focus on making the most of the opportunities that the clean energy transition offers so that climate mitigation and adaptation policies come hand in hand with rising prosperity,” he stated.

Roaf further drew attention to what countries can do themselves to maximize climate finance and make the best use of it.

“Mobilising the private sector is critical, with policies such as carbon pricing to encourage investment in renewables, or improving adaptation incentives by reinforcing property rights or strengthening regional trade.”

In closing, Urama stressed the need for a different approach to solving the climate challenge in Africa.

“What I see are opportunities to do things differently so that we are not using an old map to chart a new world. This will include tradeoffs,” he said. “How do we work together as the global community to solve this global commons challenge for ourselves, our children, and future generations?”

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