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.
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:
"The funds raised will go to a single global pool to avoid local optimisation."
"The money will be invested wherever are the greatest needs and opportunities."
"This will be overseen by a new global governance body, devoid of national interests."
For context: African leaders are disappointed with climate commitments made by the Global North in the past. Hence the new tone.
Business is leading support. The Kenya Private Sector Alliance announced: "We call for restructuring of financing frameworks from traditional to innovative financing structures to scale up concessional funding, review terms of lending, revisit capital adequacy and risk rating of countries."
Bottom line: This sets up a foundational debate about how climate action is to be financed.
2. What’s in the innovation pipeline
Africa needs climate solutions that are investable – that is the new vision embraced by African leaders.
New ideas with great potential are the best way to attract new capital
The AU’s “climate-positive growth” agenda champions this approach
But what are ambitious long-term investors evaluating at the moment? What do innovators on the continent know and see that others haven’t yet figured out?
Pioneering unconventional solutions: Behind the scenes of Africa's climate journey lies a realm of innovative ideas poised to reshape the landscape. Let's delve into five unconventional concepts that could become big:
Hydrogen-powered aviation: While hydrogen-powered planes may not be ready for commercial use just yet, the prospect of decarbonizing air travel is exciting. As Africa's aviation sector grows, exploring hydrogen as an alternative fuel source could contribute to emissions reduction.
Turning sand to green: How to fight desertification created by climate change and allow a transition from intensive to climate-resilient agriculture? Sand to Green transforms deserts into cultivable lands using agroforestry and solar-powered desalination to create climate-smart regenerative farms. This approach, if scaled, could provide valuable insights into reclaiming degraded land and restoring biodiversity.
Coral nurseries for ocean restoration: In coastal regions, the establishment of coral nurseries offers hope for rehabilitating marine ecosystems. A Kenyan fisherman turned coral gardener demonstrates how community-led initiatives can play a pivotal role in preserving marine biodiversity.
Interspecies money: A concept that might sound futuristic but has garnered attention is the idea of a digital currency for animals. This innovative approach explores how valuing nature through an economic lens could incentivize conservation efforts and enhance biodiversity protection. And the Indian government is exploring it!
3. Q&A: Climate leaders with answers
Paul Kaluki Mutuku is the co-founder of the Kenya Environmental Activists Network (KEAN), a platform that brings environmentalists together. He will be one of key figures drafting the youth statement for the Africa Climate Summit 2023.
Q: What’s the climate-change book you would most recommend to other people? A: “United We Are Unstoppable: 60 Inspiring Young People Saving our World” by Akshat Rathi, a reporter at Bloomberg News and host of “Zero”, a climate podcast.
Q: Which African country do you find most impressive with its green agenda? A: Gabon. It may be a fossil-fuel economy, but the government is going green.
Q: What’s your earliest memory of the climate crisis? A: The terrible floods caused by El Nino in 1999 and 2000.
Q: What’s the most recent thing you’ve done to help the climate crisis? A: I’m developing a fundraising data plan to help young climate leaders get resources and eliminate bureaucratic processes that prevent them getting funded.
4. Media monitoring
Don’t have time to read 100+ media sources daily? We’ve done it for you:
More than 100 million Africans might become displaced from their homes as a result of climate change, setting off waves of migration
Taxation is coming to Africa’s green economy, especially the carbon markets. The pendulum swings away from a light touch.
The EU is homing in on green aviation fuel in Africa, leveraging a $324 billion infrastructure fund.
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