Financing Africa's Climate Change Strategy

In September 2023, Kenya and the African Union (AU) hosted the continent's first Climate Summit in Nairobi. Themed “Driving Green Growth and Climate Finance Solutions for Africa and the World”. The summit aimed to address the intersection of climate change, Africa’s development, and the need for increased global climate investment, particularly in Africa. The summit culminated in The Nairobi Declaration.

The African Leaders Nairobi Declaration on Climate Change and Call to Action, also known as The Nairobi Declaration, is a 12-page policy document in which the African Heads of State and Government outline a united stance on climate action. Despite climate change’s devastating effect on Africa, Africa is only receiving ~12% of the climate financing it needs. Recognising Africa’s vulnerability to climate change despite its lower historical emissions, the declaration emphasises the need for a global response. It outlines key action areas for both African nations and the international community.

The declaration proposes a two-pronged approach to driving green growth in Africa. First, it outlines African nations' commitments to accelerating mitigation efforts, such as scaling up renewable energy deployment and improving energy efficiency. Secondly, it calls for support from the global community, including (a) the establishment of a global carbon tax regime and (b) improving Africa’s access to climate finance.

A Global Carbon Tax Regime

A global tax regime is a bold move. This would unify the currently fragmented approach to carbon pricing (there are over 70 different systems worldwide), creating a stronger incentive for countries and businesses to reduce emissions. The revenue generated could then be used to fund low-carbon projects globally, accelerating the transition to a sustainable future. While political support for such a regime has been limited historically, Africa’s united call could be a tipping point, leading to significant emissions reductions and unlocking large-scale financing for climate action.

Improving Access to Finance

The Nairobi Declaration acknowledges the significant funding gap hindering Africa's transition to a low-carbon economy. Current borrowing options are limited due to high borrowing costs and unfair risk assessments for African nations. To address this challenge, the declaration proposes a comprehensive approach that includes a new financing architecture to channel investment towards climate action in Africa, an approach to debt restructuring and relief that frees up resources for climate investments, and the development of a Global Climate Finance Charter by 2025.

The Global Climate Finance Charter is a new international agreement which would establish a dedicated framework for financially supporting Africa's climate action efforts.

By implementing these solutions, the declaration aims to unlock the financing needed for Africa's sustainable development and climate resilience.

Moving forward

The Nairobi Declaration marks a turning point for Africa's climate agenda, and the unanimous adoption by African leaders signifies a unified front on climate actions. The summit generated significant momentum, securing $26 billion in pledges for climate action in Africa and formed the basis of the COP 28 African common agenda. The establishment of the Africa Climate Summit as a biennial event further underscores the continent's commitment to leading on climate issues.

However, translating aspirations into action hinges on securing sufficient and targeted climate finance. The ongoing negotiations on the New Collective Quantified Goal on Climate Finance present a critical opportunity. African nations must actively engage in the process, ensuring the new climate finance target to replace the US$100 billion/year goal that was set more than a decade ago, prioritises Africa's specific needs and vulnerabilities.

Furthermore, collaboration between African governments, developed countries, and the private sector is essential. By mobilising resources, fostering innovation, and implementing effective adaptation and mitigation strategies, this collective effort can unlock Africa's full potential to lead on climate action and build a more resilient future.