It is important for external finance to take debt crises in some Africa countries into account
MDBs must play bigger role in financing adaptation activities
Dr. Mahmoud Mohieldin, UN Climate Change High Level Champion for Egypt and UN Special Envoy on Financing for 2030 Sustainable Development Agenda, said that financing development and climate action in Africa requires the adoption of new concessional finance policies by IFIs and MDBs.
This came during his participation in a session entitled “The Role of Innovation, Governance and Partnerships in Unlocking Climate Finance in Africa” within the activities of Africa Climate Summit (ACS) held in Nairobi, Kenya, with the participation of Vera Songwe, Executive Secretary of the Economic Commission for Africa (ECA) and nonresident senior fellow in the Africa Growth Initiative at the Brookings Institution, Bogolo Kenewendo, Special Advisor for UN HLCs, Ibrahima Cheikh Diong, UN Assistant Secretary General and Director General of the African Risk Capacity Group, Amadou Hott, Special Envoy of the President of the African Development Bank for the Alliance for Green Infrastructure in Africa, and Denys Denya, Executive Vice President at Africa Export-Import Bank.
Mohieldin stressed the importance of legislative and institutional reform at the level of countries, institutions and development banks to benefit from various types of financing, pointing out that there is a gap in financing development action of $5.3 trillion, including a deficit of $2.4 trillion in climate finance alone, $1.4 trillion of which must be provided through domestic financing sources and $1 trillion through external sources, in addition to $300 billion should came from development financing institutions and about half a trillion dollars should be contributed by private sector.
Mohieldin noted the importance of not separating climate finance and development finance as financing mitigation and adaptation activities is financing for different SDGs, an approach that COP27 in Sharm El Sheikh sought to emphasize.
Mohieldin highlighted the necessity of creating integration and harmony between the global effort and national efforts to achieve SDGs, including climate targets.
He stated that private sector must participate in implementing climate action aspects including mitigation and adaptation measures, stressing the need for concessional financing provided by MDBs and IFIs, beside financing mechanisms to deal with climate change loss and damage through grants, which emphasizes the importance of blended finance that integrates public, private, domestic and external sources of finance.
The climate champion stressed that financing from external sources must take into account the debt crises suffered by a number of African countries, while at the country level, African countries need to mobilize financing from domestic sources through tax reform, updating legislative frameworks related to investment and financing, activating various financing instruments such as debt swaps, establishing carbon markets, issuing green bonds, and localizing climate and development action through the preparation of investable and bankable development and climate projects.
Mohieldin emphasized the need to accelerate the MDBs evolution process to be able to meet the increasing financial requirements for development and climate action, adding that this could happen through a road map driven by strong political will with the aim of maximizing capital, adopting new policies for concessional finance, de-risking financing and investment in climate and development projects, and scaling the participation of the private sector in climate and development action.
“Given that the private sector contributes more to financing mitigation activities, MDBs should play a bigger role in financing adaptation activities that Africa needs in the first place.” Mohieldin said, explaining that Sharm El Sheikh Adaptation Agenda (SAA) launched during COP27 includes key areas of work such as food, agriculture, water, infrastructure, human settlements, coasts and marine life protection, which are vital areas that MDBs as well as private sector can contribute to financing their projects.