Nairobi Declaration on Climate Change

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This week’s edition covers the Nairobi Declaration on Climate Change, signed by African governments at the just concluded Africa Climate Summit. It also reviews Nigeria and South Africa's economic performance in the second quarter of this year.

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Nairobi Declaration on Climate Change

Last Wednesday, African leaders concluded the continent's first Climate Summit. As a result, the Nairobi Declaration was adopted with the aim of delivering climate-positive growth and finance solutions for Africa, as well as establishing a common position ahead of upcoming global conferences. The proposals in the Nairobi Declaration will be taken to the U.N. climate conference later this month, prior to the COP28 summit, which is scheduled to take place in the United Arab Emirates in November.

The summit recognized the need for collective action. African governments called upon the global community to act urgently in reducing emissions, keeping past promises, and supporting the continent in addressing climate change to:

• Accelerate all efforts to reduce emissions to align with the goals set forth in the Paris Agreement.
• Honor the commitment made 14 years ago at the Copenhagen conference to provide $100 billion in annual climate finance.
• Uphold commitments to a fair and accelerated process of phasing down coal and abolishing all fossil fuel subsidies.
• Swiftly operationalize the Loss and Damage facility that was agreed upon at COP27.
• Increase Africa’s renewable generation capacity from 56 GW in 2022 to at least 300 GW by 2030, both to address energy poverty and to bolster the global supply of cost-effective clean energy for industry.

African governments also made collective commitments, with major priorities including:

• Developing and implementing policies, regulations, and incentives to attract investment in green growth and inclusive economies.
• Prioritizing climate-positive growth in their economic development plans, which includes expanding just energy transitions and renewable energy.
• Strengthening continental collaboration, as it is crucial for enabling and advancing green growth.
• Finalizing and implementing the draft African Union Biodiversity Strategy and Action Plan
• Building effective partnership between Africa and other regions, to meet the needs for financial, technical and technological support needs, as well as knowledge sharing for climate change adaptation.

Read the full declaration here: https://policyvault.africa/policy/nairobi-declaration-on-climate-change-2023/

At the end of the three-day summit, governments, development banks, private investors and philanthropists collectively committed investments of nearly $26 billion. Here are some notable investments:

• The United Arab Emirates committed $4.5 billion to finance climate projects in Africa.
• Germany announced climate finance pledges of €450 million (approximately $481 million) to the continent, along with a €60 million debt swap with Kenya.
• The United States Announced $161 million in new investments.
• The United Kingdom pledged ￡49 million for new climate adaptation projects in Africa.
• The African Development Bank launched a $1 billion facility for youth adaptation initiative.
• The EU announced €12 million in grants to support Kenya’s Green Hydrogen Strategy and Roadmap, which was launched at the Summit.
• The Green Climate Fund committed $189 million to support the Green Fund.

Check out an overview of all commitments at the Africa Climate Summit here.

Data Vault – A look into Nigeria and South Africa’s Second Quarter Performance

As per the recent report from the National Bureau of Statistics, Nigeria's Gross Domestic Product (GDP) for Q2 2023 expanded by 2.51%, marking a marginal uptick from the 2.31% growth observed in the previous quarter. However, this figure represents a decline from the 3.54% growth recorded in Q2 2022. The primary drivers of this growth were the Agriculture, Trade, and Telecommunications sectors.

• The agricultural sector saw growth of 1.5% and remains the largest contributor to Nigeria's GDP, accounting for 23.01%. Its contribution to GDP saw a slight decrease compared to Q2 2022 (23.24%).
• Trade expanded by 2.41% and holds the position of the second-largest contributor to real GDP, contributing 16.8% to the overall figure.
• Telecommunications experienced robust growth of 9.74% and is the third-largest contributor to real GDP, contributing 16.06%.
• Conversely, the Crude, Petrol and Natural Gas sector contracted by 13.4% and ranks as the fourth-largest contributor to Nigeria's GDP, accounting for 5%, down from its Q2 2022 contribution of 6.33%.
• Road Transportation reported a significant contraction of 55.14%, a stark contrast to the positive growth rates of 8.02% in Q1 2023 and 56.38% in Q2 2022.

In the Non-Oil sector, there was an improvement in the growth rates of Agriculture, Manufacturing, and Telecommunications, recording rates of 1.5%, 2.2%, and 9.74%, respectively. This marks an enhancement from their performance in Q1 2023 when they grew by 0.9%, 1.61%, and 7.71%.

In contrast, the Oil sector demonstrated a contraction in Crude, Petrol and natural Gas, clearly illustrated by Nigeria's diminished oil production. During Q2 2023, Nigeria's daily average production was 1.22 million barrels per day (mbpd), a decrease from the 1.43 mbpd recorded in Q2 2022. The repercussions of the fuel subsidy removal, although announced towards the end of Q2, are evident in the significant contraction of 55.14% in Road Transportation.

Throughout Q2, substantial policy reforms and fluctuations in oil production acted as dampeners on economic growth. As we look ahead to Q3, elevated petrol prices and FX reforms are expected to exert an impact on various sectors including trade, agriculture, manufacturing, transportation, and household consumption.

Minimal Growth in South Africa in Q2 2023

In the second quarter of 2023, South Africa's real GDP saw a modest increase of 0.6%, an improvement from the 0.4% growth recorded in Q1 2023. Although a growth rate below 1% may not be cause for celebration, it did surpass earlier forecasts that had predicted growth to be in the range of 0.1% to 0.3%. Notably, the driving forces behind this growth on the supply side of the economy were the Manufacturing and Finance sectors.

• The Manufacturing sector grew by 2.2%, contributing 0.3 to the overall growth The finance industry expanded by 0.7% and played a pivotal role in driving overall economic growth.
• The finance sector grew by 0.7%, driven by increased activity in financial intermediation, insurance, and real estate services
• Agriculture posted a growth rate of 4.2%, particularly noteworthy considering its decline over the previous two quarters. This resurgence was fuelled by increased production in field crops and horticulture products.
• The mining industry grew by 1.3% attributed to the performance of platinum group metals, gold, minerals falling under the 'other metallic minerals' category, and coal.
• Transport, Storage and communication declined by 1.9%
• Both Trade and Construction declined by 0.4%

Despite the overall GDP growth, there was a contraction of 0.3% in household consumption during the second quarter, indicating that South Africans were not experiencing significant improvements in their cost of living. Interestingly, there was a rise in investments in solar panels as businesses sought to mitigate the effects of the consistent load shedding in the country, a topic discussed in our earlier edition.

Looking ahead to Q3, it is unlikely that there will be substantial growth unless significant structural reforms and favourable macroeconomic policies are implemented. Additionally, the continued occurrence of load shedding in Q3 is likely for several sectors, especially small and medium enterprises.

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In the News???

We're also tracking the latest current events in the news, and how they may affect the decisions of policymakers. Below are some of the latest developments.??

Nigeria | Presidential Election Petition Tribunal Upholds Bola Tinubu’s Win. Last week, the Nigerian Presidential election court in its judgement affirmed President Tinubu as the winner of the 25 February 2023 presidential election. The tribunal dismissed the petitions by the two main opposition parties—the Labour Party and the Peoples Democratic Party—for lack of merit. The opposition also released statements rejecting the ruling and reiterating they would appeal for redress in the Supreme Court. ?Meanwhile, last week also marks President Tinubu’s 100-days in office. During this period, he has implemented several key policies including removing the controversial fuel subsidy, floating the domestic currency, Naira, in the FOREX market, and appointed ministers and other members of his cabinet. ?

?Africa | Africa Union to Join the G20 in 2024. In the G20 group of nations meeting held in India in this past week, the group agreed to grant the African Union a permanent membership status effective from 2024 when the membership will be formalized. Since 2010, the African Union has attended the G20 as an ‘invited international organization’. This development is deserving given Africa’s growing global influence especially as the African Continental Free Trade Area (AfCFTA) which is the largest free trade area, brings the continent to the forefront of global economic trade.

Niger | France Begins Talks to Withdraw its Troops. Six weeks after the military coup in Niger deposed president Mohamed Bazoum, France have begun talks for the withdrawal of its troops from Niger. The last six weeks, there have been anti-French protest in front of the French military base calling for their departure. There are currently about 1500 French troops in Niger to support the Sahel regions effort to combat insecurity and insurgence. This is not the first time French troop have been sacked in French-West Africa. Since 2020, Mali and Burkina Faso have expelled French troops following military coups that ousted democratic leaders as well as public exasperation with the influence of France in domestic affairs.

Want more? Check some of our recently published insights, which provide you with deeper analysis and context at the intersection of public policy and current events.

Reviewing Buhari’s Administration Cash Transfer Policy?

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President Muhammadu Buhari established a Conditional Cash Transfer (CCT) programme as part of the broad 2016 Social Intervention Scheme, part of a key campaign promise to reduce poverty through robust social intervention. The Minister of Humanitarian Affairs emphasized the success of the CCT stating in a press brief, that since 2015, over 1 million households (7 million persons) have benefited. However, looking at the overall data, the number of Nigerians in poverty has increased, from 40.1 percent in 2015 to 45 percent in 2023. This data suggests poor households are no better off now compared to 2015. In this article, we discuss some issues and challenges for this.?Read more…?

How Has Kenyan President William Ruto Fared Six Months into His Tenure??

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Elected on the promise of a "Bottom-Up Economic Transformation," President Ruto has taken several early actions in line with his pledges of economic transformation. He recently promised a KES50 billion annual commitment to the Hustlers Fund initiative —a financial inclusion fund to provide affordable credit to businesses, aimed at boosting economic growth and employment. He has also kept his promise on the housing and settlement plan by launching several affordable housing projects across the country.?Read more…?

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