By Chuks Oyema-Aziken
African experts have raised concerns over slow climate financing in the continent, making demands for reform of the global financial architecture to help Africa raise adequate and affordable flows of funds.
The experts made their views in reaction to Tuesday report by Pan-African Policy Group, the African Future Policies Hub which highlighted key challenges the continent faces on climate financing, debt and issues of transparency.
African Future Policies Hub in the report, titled “Assessing Progress Towards Reforming the Global Financial Architecture: An African Perspective,” said that IMF’s quota system remains heavily skewed in favour of developed economies, with African nations holding a disproportionately small share.
“While advancements have been made in loss and damage mechanisms, commitments to adaptation finance and the delivery of climate finance commitments remain insufficient.
“Multilateral Development Banks have initiated comprehensive reforms, but implementation has been uneven. A number of Africa’s priorities are yet to be operationalised, including the re-channeling of SDRs through the African Development Bank. Capital Efficiency and Country Engagement: Progress in enhancing capital efficiency and transforming country engagement has been limited.
“African heads of state have called for a US$120 billion replenishment of the International Development Association, but major donors and World Bank management are only considering a US$105 billion benchmark.
“The G20 Common Framework remains unreformed, with limited progress in addressing high borrowing costs and lengthy debt resolution.
“Significant progress has been made towards establishing a legally binding UN tax convention, which could help address tax avoidance and evasion.
“There has been progress in advancing global climate taxes, but no progress on addressing unilateral climate-related trade measures.
“Concerns remain over the transparency of “new and additional” climate finance, hindering effective climate action and resource allocation.
“The use of debt-for-climate and nature swaps holds promise but has been limited in Africa.
“African negotiators have called for the NCQG to be based on a needs-driven approach to address countries’ significant financial needs for climate adaptation and mitigation.
“The UN has set a target for developed countries to allocate 0.7% of their Gross National Income to ODA, but funding levels have been declining.
The report calls for continuous political pressure on global financial leaders and targeted advocacy efforts to drive progress in the reform of the international financial system.
Maria Nkhonjera, Senior Policy Lead (Public Finance), African Future Policies Hub said that the assessment shows little to no progress is being made on addressing the continent’s debt concerns, high cost of borrowing, and actual disbursements against financial commitments and pledges−putting into question transparency and accountability frameworks in the financing ecosystem.
According to Daouda Sembene, AfriCatalyst “Africa continues to benefit from international climate finance flows primarily in the form of loans, which are in many cases at market rate. This unsustainable trend needs to be promptly reversed, particularly in the case of adaptation finance. The reform of the global financial architecture must be calibrated to help Africa raise adequate and affordable flows of climate finance, notably in the form of grants and concessional loans.” Daouda Sembene, AfriCatalyst
“Reforming the global financial architecture means many things, but from an African perspective, especially responding to the UNFCCC process, it appears clear that progress remains critically insufficient until and unless we see significant new and additional international provision of grant-equivalent finance to developing countries, on the scale of the hundreds of billions required, respectively, to equitably address mitigation, adaptation, and loss and damage needs,” Iskander Erzini Vernoit, Imal Initiative for Climate and Development said.
Similarly, Faten Aggad, African Future Policies Hub said “As we head to COP29 where financing decisions will be taken, it is important to also take stock of progress on the reforms that are said to help us generate the trillions of funding needed to finance climate action in developing countries. Despite positive developments, there is clearly significant work that is still needed especially reforms requested by African countries based on their realities.”
