Editor’s Note: Adjoa Adjei-tum. She is the founder and CEO of an Africa-focused and UK-based consulting firm Emerging Business Intelligence and Innovation (EBII) group for global investors interested in Africa and emerging markets.
The views expressed in this article are solely his.
CNN
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The recently concluded COP27 was dubbed the “African COP” – with the continent taking center stage in the global effort to combat the causes and effects of climate change.
As talks in the Egyptian resort of Sharm el-Sheikh unfolded over the weekend, there was a significant breakthrough in one of the most contentious elements – creating a fund to help the most vulnerable developing countries hit by climate disasters.
The backdrop to COP27 was a series of devastating global weather events, including record-breaking floods in Pakistan and Nigeria, the worst drought in four decades in the Horn of Africa, and severe European heat waves and hurricanes in the US.
Damages and loss funds – to pay for unexpected impacts of climate change that are not avoided through mitigation and adaptation – have been a major stumbling block in COP negotiations.
The richest, most polluting countries are reluctant to agree to a deal, worried it could put them on the hook for costly legal claims for climate disasters.
I welcome the progress here, as African countries bear the brunt of climate change. According to , the continent contributes about 3% of global greenhouse gas emissions United Nations Environment Programme And International Energy Agency (IEA).
Climate change is estimated to cost the continent between $7 billion and $15 billion a year in lost economic output, or GDP, rising to $50 billion a year by 2030. African Development Bank (AfDB).
But my joy is muted – the devil is in the details, as always. As an African diaspora entrepreneur whose work focuses significantly on the impact of climate change on African financial institutions and the risk profile of countries, I am concerned about the lack of detail on how the fund will operate, when it will be implemented. will, and time-scale. . I fear these may take years.
During a recent visit to the US, I Democrat Congresswoman Rep. Discussed compensation money with Ilhan Umar. He said it was important for the US and other countries to invest heavily, which could come in the form of reparations.
He spoke about the importance of consultation with affected communities in Africa to avoid exploitation and the need for countries like the US and China to end fossil fuel expansion and phase out existing oil, gas and coal that way. which is “fair and equal.”
Adaptation is a major challenge for Africa – Estimates of AFDB that the continent needs between $1.3 and $1.6 trillion to adapt to climate change by 2030.
The Bank’s Africa Adaptation Acceleration Program in partnership with Global Center on Adaptation (GCA), aims to raise $25bn in financing for Africa, for projects such as weather forecasting apps for farmers and drought-resistant crops.
Now is the time for African countries to impose climate export taxes on commodities like cocoa and rubber to help pay for climate adaptation. But this is still less than the money Africa needs.
Adaptation is about building resilience and capacity, and I believe our governments, banks and businesses must also adapt.
I am calling on our governments, institutions and companies to attract green finance and boost efforts to make Africa more resilient by improving governance, tax systems, anti-corruption efforts, and legal compliance.
Sustainability is not a business tax, it is essential to business survival. Only companies focused on the changing world around us – from regulation to consumer and investor attitudes – will survive the climate crisis.
Businesses that ignore it can expect fines, boycotts and limited access to funding. Banks will also suffer. So the financial sector needs to be better prepared and more agile.
This message will be reinforced when I meet with CEOs, banking executives, and the Central Bank of Nigeria at the 13th Annual Bankers Committee Retreat hosted by the Nigerian Bankers Committee in Lagos next month. The aim is to support the country’s largest banks as they navigate new international sustainability rules.
Increasingly, investment funds must conform to a green classification – a system that highlights which investments are sustainable and which are not. In other words, banks will only support investments by organizations in G20 countries if they comply with national or supranational regulations, such as the European Union’s Green Taxonomy.
This will not only help tackle greenwashing but also help companies and investors make more informed green choices. In addition, G20 countries are asking their banks to predict how risky their loans are due to climate change.
African countries must implement strong mechanisms to mobilize private capital and foreign direct investment in key sectors. Governments must ensure that they have an enabling environment for increasing green investment.
Regulators should strengthen their capacity to develop and effectively enforce climate-related regulations. Companies, especially banks, should strengthen climate risk management teams, regulatory compliance expertise, and preparation of bankable projects for international climate finance. This is the foundation for a successful transition to a low-carbon economy.
Looking ahead, there are other actions we can take. The African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area and a single market of about 1.3bn people – can protect Africa from the negative effects of climate change, such as food insecurity, conflict, and economic vulnerability.
It can lead to the development of regional and continental value chains, intra-African trade deals, job creation, security and peace. A single market can drive less energy-intensive economic growth while keeping emissions low, for example by developing regional energy markets and manufacturing hubs.
But we much need pan-African coordination, like the European Union, to accelerate AFCFTA. I urge our governments to work together and take swift and concrete action to ensure the full and effective implementation of the AfCFTA. There is no time to waste.
This will not be popular with some African regimes as they will be forced to be more transparent and accountable with their public finances.
This year’s COP may have been marred by chaos, rows between rich and poor countries, and broken multi-billion dollar pledges by developed countries fueling the climate crisis.
Many observers point out that the final deal did not include commitments to reduce or reduce fossil fuel use.
But the deal to create a pooled fund for countries most affected by climate change is important, and as UN Secretary General Antonio Guterres warned, this was not the time to point fingers.
This is not the time for the blame game either. This is a wake-up call for African governments, banks, institutions and companies to unite, step up and adapt to a new climate reality.
