Green Growth Needs Liquidity – Closing Africa’s Climate Finance Gap

While Africa has historically contributed less than 4% of global greenhouse gas emissions, the continent is the most vulnerable to the impacts of climate change. At the same time, the international community is starting to recognize Africa as a source and role model of green energy generation and important guardian of biodiversity, asking countries to foster green growth and preserve natural habitats.

Global climate change adaptation towards a low-carbon economy requires extensive financial resources ($4-6 tn per year according to the Sharm el-Sheikh Implementation Plan), which affected countries cannot leverage on their own. In addition to existing adaptation and mitigation commitments, COP27 ended with a historic pledge by heavy emitters to set up a loss and damage fund for vulnerable nations.

Sustainable and effective climate finance draws from a multitude of financial instruments and incentives: reforming the international financial architecture and issuance of Special Drawing Rights, changing the narrative of Africa as an attractive investment destination, increasing the scale and scope of public guarantees, and enabling liquidity and affordable borrowing through concessional loans, credit ratings, grants, and access to Eurobonds and repo markets.

Central to the debates on climate finance at COP27 and beyond is a report by the Independent High-Level Expert Group, co-chaired by Dr Vera Songwe, former Executive Secretary of the UN Economic Commission for Africa and current Chair of the Liquidity & Sustainability Facility (LSF). A renowned authority and leader in the field, Dr Songwe will give an input and recommendations on how to unlock financial pledges and leverage climate finance for vulnerable nations.