Africa is set to experience a significant shortfall in the funds needed to address climate change, with a gap of $2.5 trillion by 2030, according to the United Nations (UN). The continent, which contributes minimally to global greenhouse gas emissions, is disproportionately affected by the adverse impacts of climate change.
Speaking at a conference in Victoria Falls, Hanan Morsy, the chief economist at the United Nations Economic Commission for Africa (UNECA), highlighted the stark disparity in global investment towards clean energy in Africa. Despite requiring $2.8 trillion for clean energy investments by 2030, the continent only attracts 2% of global funding in this sector.
The insufficient funding not only exacerbates the climate crisis in Africa but also creates a cycle of increased risk exposure, higher finance costs, and reduced fiscal capability. “We end up in a vicious circle with investment shortfalls increasing exposure risk and worsening impact, further eroding fiscal space and raising finance costs,” Morsy stated.
The economic toll of climate change on African nations is significant, costing countries on the continent up to 5% of their GDP annually. This is occurring despite the continent’s low carbon footprint, with each African producing only 1.04 tonnes of carbon dioxide emissions in 2021—less than a quarter of the global average.
The conference also shed light on the challenges posed by heavy public debt and the unfair perception of risk and credit ratings, which limit borrowing options and inflate the cost of debt for African countries. According to Claver Gatete, UNECA Executive Secretary, subjective credit ratings could be costing Africa as much as $74.5 billion.
Calls were made for the reform of global financial architecture to address these inequities and provide Africa with fair borrowing options. As the continent grapples with the impacts of climate change, the need for substantial investment in adaptation and mitigation efforts remains critical.
