Editor’s Note: Adjo adjei-twm. She is the founder and CEO of the Africa-focused and UK-based advisory firm Emerging Business Intelligence and Innovation (EBII) group for global investors with an interest in Africa and emerging markets.
The opinions expressed in this article are solely his.
CNN
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The recently concluded COP27 was dubbed the “African COP” by – with continent center stage In the global effort to fight the causes and effects of climate change.
As a conversation in the Egyptian resort of Sharm el-Sheikh spread over the weekend One of the most infuriating elements was a key breakthrough – creating a fund to help the most vulnerable developing countries hit by climate disasters.
The backdrop for COP27 was a series of devastating global weather events including record-breaking floods in Pakistan and Nigeria, the worst drought in four decades in the Horn of Africa, and severe European heatwaves and storms in the Americas.
The Loss and Damage Fund – to pay for the sudden effects of climate change that cannot be avoided by mitigation and adaptation – has been a major stumbling block in the COP negotiations.
The richest, most polluting countries have been reluctant to strike a deal, worried it could put them on the hook for costly legal claims for climate disasters.
I welcome progress here, because African countries are bearing the brunt of climate change. The continent contributes about 3% of global greenhouse gas emissions United Nations Environment Programme And this international energy agency (IEA).
Climate change is estimated to cost the continent between $7bn and $15bn in lost economic output or GDP per year, rising to $50bn per year by 2030. African Development Bank (AfDB).
But my joy is muted – the devil is, as always, in the details. As an African expatriate entrepreneur whose work focuses significantly on the impact of climate change on African financial institutions and the risk profiles of nations, I am concerned about the lack of detail on how the fund will work. When will it be implemented, and the timescale. I’m afraid it may take years.
During a recent visit to the US, I discussed the reparations amount with Congresswoman Ilhan Omar, a US Democrat. He said it is important for the US and other countries to invest heavily, which could come in the form of compensation.
She stressed the importance of consulting affected communities in Africa to avoid exploitation and the need for countries such as the US and China to end fossil fuel expansion and phase out existing oil, gas and coal in a “fair and equitable” way. talked about ,
Adaptation is Africa’s great challenge Afdb Estimates The continent needs between $1.3 and $1.6 trillion by 2030 to adapt to climate change.
Bank’s Africa Adaptation Acceleration Program in partnership with Global Center on Adaptation (GCA) aims to raise $25 billion in finance for Africa for projects such as a weather forecast app for farmers and drought-resistant crops.
Now is the time for African nations to impose a climate export tax on commodities like cocoa and rubber to help pay for climate adaptation. But it still falls short of what Africa needs.
Adaptation is about building resilience and capacity, and I believe our governments, banks and businesses must adapt as well.
I am calling on our governments, institutions and companies to step up efforts to attract green finance and make Africa more resilient by improving governance, tax systems, anti-corruption efforts and legal compliance.
Sustainability is not a business tax, it is essential for the survival of the business. Only companies focused on the changing world around us – from regulation to consumer and investor perspectives – will survive the climate crisis.
Businesses that ignore this can expect fines, exclusion and limited access to funds. Banks will also suffer loss. So the financial sector needs to be better prepared and more agile.
This message will prevail when I meet CEOs, banking executives and the central bank of Nigeria next month at the 13th Annual Bankers’ Committee Retreat hosted by the Nigerian Bankers’ Committee in Lagos. It aims to support the country’s largest banks as they navigate new international sustainability rules.
Increasingly, investment funds must conform to a green classification – a system that highlights which investments are sustainable and which are not. In other words, banks will only support investments by institutions in G20 countries if they conform to national or supranational regulations such as the European Union’s Green Taxonomy.
This will not only help combat greenwashing but also help companies and investors make more informed green choices. Additionally, G20 countries are asking their banks to estimate how risky their loans are due to climate change.
African countries must implement robust systems to mobilize private capital and foreign direct investment in key sectors. Governments must ensure that they have an enabling environment for increased green investment.
Regulators should strengthen their capacity to develop and effectively enforce climate-related regulations. Companies, especially banks, should strengthen climate risk management teams, regulatory compliance expertise and the preparation of bankable projects for international climate finance. It is the foundation of a successful transition to a low-carbon economy.
Looking ahead, we may take more actions. The African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area and single market of some 1.3 billion people – could protect Africa from the adverse effects of climate change such as food insecurity, conflict and economic vulnerability.
This can lead to the development of regional and continental value chains, intra-Africa trade deals, job creation, security and peace. A single market could reduce energy-intensive economic growth while keeping emissions down, for example by developing regional energy markets and manufacturing centres.
But we need better pan-Africa coordination like the EU to accelerate AfCFTA. I urge our governments to work together and take prompt and concrete action to ensure full and effective implementation of the AfCFTA. There is no time to waste.
This would not be popular with some African regimes as they would be forced to be more transparent and accountable with their public finances.
This year’s COP may have been marred by chaos, squabbles between rich and poor countries, and billions of dollars of pledges broken by developed countries that fueled the climate crisis.
Many observers point out that the final deal did not include a commitment to eliminate or reduce the use of fossil fuels.
But the deal to create a collective fund for countries most affected by climate change is crucial, and as UN Secretary-General Antonio Guterres warned, this was not the time for finger-pointing.
This is also not the time for the blame game. This is a wake-up call for African governments, banks, institutions and companies to unite, step up and adapt to a new climate reality.