Investing in Climate Resilience as a Pragmatic Path to Africa’s Net Zero

A new report from the Africa Finance Corporation lays out the continent’s position of balancing the need to reduce emissions with critical development imperatives as Africa begins to move towards net zero and the upcoming United Nations Conference on COP27 climate change in Egypt.

Africa COP Roadmap: A Pragmatic Path to Net Zero [see report below] takes place against the backdrop of a continent that bears the brunt of the devastating impact of climate change, but has contributed the least to global emissions. The low carbon output reflects Africa’s crippling energy deficit that has hampered industrialization and economic development.

Enlit Africa (the unifying brand for African Utility Week and POWERGEN Africa) invites you to join the conversation from June 7-9, 2022 in Cape Town, South Africa.

Samaila Zubairu, President and CEO of AFC: “Africa is unlike any other continent when it comes to global net zero and we need a plan for common negotiating positions that reflect this.

“We advocate for consideration of Africa’s energy deficit and the need for quantum leaps in industrialization for job creation and poverty reduction, as well as for built infrastructure that is future proof. climate and protecting our powerful carbon sinks,” said Zubairu.

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The report argues that while reducing emissions is vital for the wealthiest, most developed and most polluting nations, there is a more limited universal impact to be gained from reducing sub-Saharan Africa’s much lower emissions.

He concludes that African nations will have a far greater effect in the fight against global warming by focusing instead on three important areas of change: locate, rebuild and innovate.

Locate

According to the report, Africa should focus on developing local industries by placing processing and manufacturing at the center of sustainable circular economies. This would eliminate emission-rich shipments of minerals and other African products to Asia for manufacturing and processing, only to be shipped back as finished goods for consumers.

“The irony here, of course, is that manufacturing requires electricity. We need the half of the African population that does not have access to energy to be connected. While renewable sources are the ultimate goal, Africa must also tap into its abundant natural gas reserves as an essential transitional energy source to support industrialization – a position supported by the recent decision of the European Commission to classify natural gas as a form of green energy and a vital transition fuel on the path to decarbonization,” reads the report.

Given that much of Africa’s population is effectively at zero thanks to the lack of electricity, job creation and economic growth through the exploitation of abundant natural gas reserves could help countries to invest in renewable sources.

What would be important, however, is to establish local manufacturing of renewable energy technology components and ensure that rare earth metals are mined in a sustainable and resource-efficient manner, minimizing additional pollution. and keeps the continent on course for net zero.

of interest
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Rebuild

The United Nations Office for Disaster Risk Reduction estimates that the cost of structural damage caused by natural disasters in Africa will climb to $145 billion per year by 2030. The continent therefore needs strong and substantial buildings to rebuilding ocean and river defenses and transport infrastructure, building electricity grids and off-grid energy. This in turn will help develop sustainable mining and the circular economy which could drive growth and job creation.

Finnover

In order to effect change, Africa-based institutions like IFC need access to critical climate funds through financial innovation to support resilient construction and investment in localized large-scale manufacturing and processing.

Funding is also needed to preserve Africa’s vast carbon sinks which absorb more carbon dioxide each year than the rainforests of any other region. These are depleted by local people for firewood for cooking and heating.

AFC believes that by leveraging financial support from governments and NGOs, it can reduce the risks associated with climate investments and deliver strong returns to entice institutional investors to fund.

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Using climate resilience to bring Africa back to net zero

The Africa Finance Corporation will launch a $2 billion facility to support recovery and resilience in Africa. It will commit to funding up to 50% of the new African Economic Resilience Facility and will disburse the remaining funding through its network of international partners and investors.

The Facility will be disbursed through AFC loans to commercial banks, regional development banks and central banks in various African countries. This should provide them with hard currency liquidity to fund trade and other economic activities in their jurisdiction.

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Institutions would then be able to leverage AFC’s access to global funding to access funding at competitive rates.

Banji Fehintola, Head of Treasury and Financial Institutions, AFC, said the COVID-19 pandemic has hampered Africa’s economic growth trajectory and widened the trade finance gap. “The Russian-Ukrainian conflict has added a new set of challenges that are negatively impacting growth prospects across the country.

“We are determined to play a leading role in helping the continent’s recovery and resilience, not only through the work we do to close Africa’s infrastructure gap, but also through targeted interventions such as than this $2 billion Economic Resilience Facility,” Fehintola said.

Applications for the Africa Economic Resilience Facility will open this month on the AFC website.

Innovative financing mechanisms and unpacking the reality of just energy transition for Africa are topics of discussion at Enlit Africa

Enlit Africa (the unifying brand for African Utility Week and POWERGEN Africa) invites you to join the conversation from June 7-9, 2022 in Cape Town, South Africa.

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