Egypt-ICF2022: The African continent is one of the least beneficiaries of climate finance with a share of 5.5%
Egypt-ICF2022: Bridging the financial gap for Africa green transition will only happen through close cooperation between relevant parties
Egypt-ICF2022: Egypt Country Platform for green projects "NWFI" is a pioneering model that sets the example to be followed by other countries
Egypt-ICF2022: Glasgow Alliance to support the Egypt Country Platform for NWFE, $130 trillion has already been allocated to finance climate action in developing countries and emerging markets.
Egypt-ICF2022: African countries should have their own strategy to combat climate change as well as a green growth plan that makes their economies more resilient.
Two panels were held titled “From Pledges to Implementation: Translating Financial Commitments to Opportunities in Africa” , and “African Countries Ownership in Determining Climate Agenda”
On the sidelines of Egypt International Cooperation Forum (Egypt-ICF2022) in its 2nd edition, kicked off on Wednesday, a panel discussion held titled “From Pledges to Implementation: Translating Financial Commitments to Opportunities in Africa”, the participants unanimously agreed on the need to provide the necessary mechanisms and tools that are meant to ensure that the international community shifts from climate action pledges to implementation, and that Africa’s development efforts are coupled with climate action.
The speakers noted that providing climate finance and bridging the gap between what is needed and what is already available, will only happen through close cooperation between relevant parties from governments, multilateral development banks, the private sector, non-profit organizations, and civil society, based on what was agreed upon at the COP26 Glasgow Climate Summit.
Moreover, they emphasized the importance of developed countries fulfilling their pledges to provide $100 billion for developing countries and to double adaptation-related finances.
The Climate Policy Initiative indicates that the estimated financing needed for Africa from 2020-2030 is about $250 billion in order to enhance its efforts to transform into a green economy. The actual finance inflows at the present time amount to only about $30 billion, which means that the continent is one of the least beneficiaries of climate finance with a share of 5.5%, compared to 75% of the flows going to East Asia and the Pacific, Western Europe and North America.
In light of hosting COP27 in November, the Egyptian presidency announced that the conference's key objective is moving from pledges to implementation in terms of climate action finance commitments.
The panel aimed to highlight the role of the different stakeholders in translating financial commitment into implementable projects, capitalizing on the needed interplay between them, to promote an actionable climate agenda, whilst ensuring environmental sustainability as well as decent work, social inclusion, and poverty eradication.
It witnessed the participation of high-level officials from governments, development partners and international institutions, who are Rania Al Mashat, Eygpt’s Minister of International Cooperation, Mafalda Duarte, CEO of the Climate Investment Funds (CIF), Hiroshi Matano, Executive Vice President, and Multilateral Investment Gurantee Agency (MIGA), kerri-Ann Gones, Deputy-Secertary General at Organization for Economic Cooperation and Development (OECD), Mahmoud Mohie El Din, Executive Director for Arab States at the International Monetary Fund (IMF), Mark Carney, UN Special Envoy on Climate Action, and Hippolyte Fofack, Chief Economist at Afreximbank.
From her part, Rania Al-Mashat, Minister of International Cooperation, commended the large presence of development partners for the second edition of the International Cooperation Forum Egypt-ICF 2022, saying: “Development partners are the ones who contribute to the success of this work through financing.”
She stressed that Egypt's launch of the Egypt Country Platform for "NWFI" is an example that can be followed by other countries, noting that Egypt is "absolutely clear" about its goals related to climate change, and has developed a strategy that does not overlook the relationship between climate and development.
Moreover, Al Mashat said that Egypt has mainstreamed the climate dimension into the implementation of development projects implemented during the past period, and continued: "Instead of looking at the climate as an obstacle to countries, we are integrating climate goals into our development plan, and this is the strong message that we want to convey to the attendees at the COP27 conference.”
Hiroshi Matano, Executive Vice President, and Multilateral Investment Gurantee Agency (MIGA), reviewed the MIGA provision of funds for climate-related projects worth $58.3 billion over the past two years, asserting the importance of strengthening all climate-related initiatives during the coming period to ensure an increase in climate finance.
“MIGA is cooperating with the Egyptian government to provide funding for Egypt’s strategic projects for climate change 2050,” he added.
On his side, Mahmoud Mohieldin, the UN Climate Change High-Level Champion for Egypt and the Executive Director for Arab States at the International Monetary Fund (IMF) mentioned that there are many ambitious development projects in Africa related to climate action, such as the project adopted by South Africa and the Egypt Country Platform for NWFE in Egypt.
Mohieldin asserted that the current funding for these projects related to food, water, and energy is unfair, ineffective, and costly.
He explained that it is important to enhance the regional dimension in climate action, pointing to the launch of the unprecedented initiative to mobilize investments to finance climate action through five regional round tables, which have so far resulted in 39 projects that can be financed and immediately implemented, including a number of projects related to the fields of energy, food and water.
Mohieldin called for the participation of all financial institutions and development banks in climate action, pointing to the Glasgow Financial Alliance for Net Zero Emissions (GFANZ), which includes more than 450 financial institutions to finance climate projects with $130 trillion, and the launch of GFANZ Africa for climate finance in the continent.
Mafalda Duarte, CEO of the Climate Investment Funds (CIF), praised the national platform for green projects “NWFE” launched by the Egyptian government, describing it as a pioneering platform and one of the promising development projects that the Climate Investment Funds (CIF) is constantly working on financing.
“CIF has more than a decade of experience in dealing with financing development work through blended financing, and dealing with risks related to capital, and are cooperating with their partners from development banks and various international financial institutions, with a focus on financing development projects,” she added.
Duarte also noted that climate investment funds attach great importance to Africa, as they pump 30% of the funds' capital into projects in the fields of energy, agriculture, water and forests, noting the pioneering of CIF in bringing together governments, the private sector, banks, in addition to development and international financial institutions.
Kerri-Ann Gones, Deputy-Secertary General at the Organization for Economic Cooperation and Development (OECD), stated that Egypt ICF-2022 amplifies the African voice, asserting the importance of working much more closely, and in full partnership with African countries that are struggling.
She expressed that OECD is currently working on a new partnership with the African Union Mission.
“We have to realize that we will not progress quickly, but we will get faster with time. Three years ago, we would not have had such a dialogue, and what led to it was data sharing, openness and partnership, so today we are witnessing a critical moment,” she said.
Mark Carney, UN Special Envoy on Climate Action, said that alignment is very different in countries of Africa, whether you're in South Africa, Egypt, Senegal or elsewhere. The transition is multifaceted in Africa.
Carney asserted the importance of making funding available for climate projects in Africa, but more important than funding is creating value by promoting innovation-based investments and reducing emissions with specific plans for zero emissions.
Carney explained that the transformation is already happening in Egypt and Africa, praising the launch of GFANZ Africa program, which will be of great benefit to the African continent.
He expressed the readiness of the Glasgow Alliance to support the Egypt Country Platform for NWFE, as the coalition has already allocated $130 trillion to finance climate action in developing countries and emerging markets.
He expressed his optimism about the implementation of climate projects, especially by the private sector, highlighting the increase in the number of companies interested in climate projects from 500 to 10,000 companies.
From his part, Hippolyte Fofack, Chief Economist at Afreximbank
asserted that Africa suffers from a major financial gap that appears when comparing what it achieves in gross domestic product and what it actually needs to finance development.
He explained that African countries focus on low-cost green transformation, and have innovative financial tools such as green bonds, but they need to activate these tools optimally to make the most of them.
In the second panel, entitled “African Countries Ownership in Determining Climate Agenda” the Forum discussed the support that African countries need at the technical and financial levels in order to define their Nationally Determined Contributions (NDCs) to the Climate Action Agenda and to enhance the ability to effectively implement them.
This discussion came out of the right of African countries to determine their national contribution to the climate agenda in accordance with their long-term development plans.
Considering the notion of country ownership and motivated by the principles of common but differentiated responsibilities, this session served as a platform to elevate the voice of Africa on climate change.
The panel aimed to highlight the technical and financial needs of African countries to develop and align their (NDCs) with long-term national development and investment plans.
During the panel, the participants discussed the mechanisms required to fulfill climate commitments, provide technical and financial support to African countries, and the role of multilateral and bilateral development partners in providing the necessary support to the countries of the continent in order to implement their nationally determined contribution, and to integrate it into long-term national development plans.
It also highlighted the need to provide support to Africa, as it is one of the most affected regions by the negative repercussions of climate change, while contributing only 3.8% of the global emissions. In addition, the continent’s 54 nations took the initiative to sign the Paris Climate Agreement.
Since October 2021, 38 African countries have submitted an update of their Nationally Determined Contribution (NDC) to the Climate Action Agenda.
The panel witnessed the participation of high-level officials from governments, development partners and international institutions, who are Egypt’s Minister of Environment, Yasmine Fouad, Cameroon’s Minister of Finance, Planning and Regional Development, Alamine Ousmane Mey, Executive Director of UNODC and Director General of the UN office at Vienna, Ms. Ghada Waly, Executive Secretary United Nations Framework Convention on Climate Change (UNFCCC), Mr. Simon Stiell, Vice President of the International Finance Corporation (IFC), Mr. Emmanuel Nyirikindal, Acting Vice President and Chief Economist, AfDB, Prof.Kevin Chika Urama, Vice President of the European Investment Bank (EIB), Ambroise Fayolle, and Director General at the Global Green Growth Institute (GGGI), Frank Rijsberman.
Minister of Environment, Yasmine Fouad began her speech with the National Climate Change Strategy, clarifying that it consists of five elements. The first one is how can you adopt a low guardian pass which focuses on the sectors around renewable transport, gas, industry and waste. The second one is related to adaptation, tackling the best ways to adapt and protect coastal zones, and how accessibility and availability of water can be managed. The third is related to implementation, where Fouad emphasized the importance to change the financial architecture at the national level.
“To fight climate change, you cannot rely on the government alone, nor the private sector alone but it’s an integration between the government, civil society and the private sector,” the Minister added.
Ghada Wally, the Executive Director of the United Nations Office on Drugs and Crime and Director-General of the United Nations Office at Vienna, said during the panel that the government's commitment is based on awareness, evidence and science to improve the standard of living, as poor countries suffer the most from those that have caused carbon emissions.
“This awareness and convergence that we are witnessing shows that we are taking the right steps by adopting policies of adaptation, mitigation and resilience, '' Waly elaborated.
She added that there is a nexus between climate change and terrorism and organized crime, noting that another important factor is the fight against corruption, and that special measures need to be taken because the world is dealing with huge sums of $1.8-$3 trillion to achieve the NDC (Nationally Determined Contribution).
According to Wally, countries that will secure this funding from innovative sources will need to have anti-corruption measures because we need to protect this money and spend it transparently and responsibly because that in itself will help countries attract more resources. “That is why putting in place measures against corruption is very important”, said Wally.
She also pointed out the need for strong crime prevention and criminal justice measures in these countries to enable policies to be implemented.
“Also, you need a strong criminal justice response and rule of law. But in order to implement a strong criminal justice system in place, you need to build their capacity and promote growth.”
For his part, Urama stated that since the 1850s, countries have managed to transition away from coal, and used gas as a transition. “A major pillar of the Paris Climate Agreement, we found out that Africa needs $1.6 trillion by 2020; but climate finance to date is about $18.3 billion, on average,” he added.
“What we are doing is trying to contribute to solving this problem, by providing more services and expanding climate finance not only in Europe. Looking at Africa, we have pumped 2.6 billion euros,” said Ambroise Fayolle, Vice President of the European Investment Bank, during his participation in the second session of the forum.
Fayolle added that last year, 50% of the funds were dedicated to climate. In Egypt, the volume of funds during the past year was one billion euros, half of which was for the climate.
The Vice President of the International Finance Corporation (IFC) said that the question is not adaptation or action to reduce climate change, as a balance must be found between them.
He added that in the financial results recently announced by the World Bank Group, the volume of climate-oriented financing rose by 19% during the last fiscal year ending last June, with a total value of $31.7 billion.
The volume of funds for emerging markets increased by 50%, which was dedicated to climate, and most importantly, there is more financing going towards adaptation as much as financing measures to mitigate climate change.
He pointed out that estimates indicate that the continent may need between $140 and $300 billion annually, which may reach $560 billion in 2050 if we are not careful, a number that our financing capabilities will not be able to meet, and thereby, Africa needs financial leverage.
Emmanuel Nyirikindal said that what they are currently seeing is that 10% of the funding goes to adaptation, which is a small number, so we must focus our resources on adaptation, which is very important for the continent of Africa to carefully select projects that have been carefully analyzed.
He added that countries should rely on the data issued by the follow-up reports on countries' strategies to confront climate change, which is a rich resource that can be used to bridge the gaps in the policies followed, as well as it is necessary to involve the private sector.
For his part, Director General of the GGGI, Frank Rijsberman, said that countries should have their own strategy to combat climate change as well as a green growth plan that makes their economies more resilient.
This year’s Egypt-ICF and the Meeting of African Ministers of Economy, Finance and Environment, will provide a platform for governments, multilateral and bilateral development partners, philanthropic foundations, private sector, think tanks, and civil society to consider the challenges the continent is offset by and explore avenues to overcome them.
The Forum’s overall objectives include: mobilization of, and acess to finance, to mobilize financing and catalyze private sector investments, focused on developing countries and Africa; financing climate action, adaptation and mitigation to leverage the necessary public and private support to accelerate climate action; and providing a timely platform to explore needed national actions that would help progress towards a just and green transition.