Africa Finance Corporation: Three steps for Africa to fight climate change

LAGOS, Nigeria–(BUSINESS WIRE)–With the hope of fighting global warming pinned on progress at the upcoming UN Climate Change Conference COP27 in Egypt, a new report from Africa Finance Corporation (AFC), Africa’s leading provider of infrastructure solutions, is setting the continent’s stance on balancing the need for emission reductions. with critical development imperatives.

Report, Roadmap to COP Africa: A Pragmatic Road to Net Zero, is set in a context where Africa has borne the brunt of the most damaging impacts of climate change, while contributing little to global emissions. This low-carbon output reflects Africa’s crippling energy deficit, which has hampered industrialization and economic development. Therefore, Africa needs a realistic agenda to tackle climate change that will allow the region to continue to advance its industrial base.

“Africa is unlike any other continent in terms of global net zero – and we need a blueprint for a collectively negotiated stance that reflects this,” said Samaila Zubairu, AFC President and CEO. “We advocate for considering Africa’s energy deficit and the need for a quantum leap in industrialization for job creation and poverty reduction, as well as building climate-resilient infrastructure and protecting our strong carbon sinks.”

The report argues that, while emission reductions are critical for the wealthier, more developed and most polluting countries, there is a more limited universal impact to be had from much lower emission reductions in sub-Saharan Africa. The report concludes that African countries will push for a much greater effect in fighting global warming by focusing on three areas of significant change.

1. Localization

According to the report, Africa should focus on developing local industries by placing processing and manufacturing at the center of a sustainable circular economy. Doing so would eliminate shipping of the emissions that spew African minerals and other commodities into Asia for manufacturing and processing, only to be sent back as finished goods to the consumer market.

Achieving this goal requires closing Africa’s energy deficit. While renewable sources are the ultimate goal, in the near future Africa will have to exploit its abundant natural gas reserves.Since much of Africa is already at ground zero, such development can be achieved without making a substantial contribution to global carbon emissions, while channeling harmful gas emissions from oil fields and reducing the use of more polluting fuels such as coal, diesel and firewood. Job creation and the resulting economic growth will enable African countries to invest further in renewable sources.

Of particular importance is creating local manufacturing of components of renewable energy technologies. It is critical for these metals to be mined in such a way as to minimize further pollution and for resource efficient sustainable mining techniques to combine with ecosystems that drive local production centers.

2. Rebuild

Africa is the region most vulnerable to the ravages of global warming mainly because its infrastructure is not well equipped to withstand climate shocks. Without intervention, the cost of structural damage caused by natural disasters in Africa will increase to US$415 billion per year by 2030 from between US$250 billion to US$300 billion today, according to the United Nations Office for Disaster Risk Reduction. The continent needs strong and formidable buildings — to rebuild marine and river defence, and infrastructure in transportation, construction, power grids and off-grid energy, which in turn will assist the development of sustainable mining and a circular economy that drives growth and job creation, according to the report.

3. Finnovate

The key to bringing about change is ensuring that African-based institutions like the AFC gain access to critical climate finance through financial innovation to support development and robust investment in local mass-scale manufacturing and processing. Funding is also needed to help conserve Africa’s vast carbon sink, which absorbs more carbon dioxide each year than rainforests in any other region but is being depleted by local residents for firewood for cooking and heating.

Working with development finance institutions, governments and institutional investors, AFC’s many projects over the past 15 years have demonstrated that it is possible to mobilize financing at scale through crowding in private sector investment. By leveraging financial input from governments and NGOs, we have the tools to reduce climate investment risk and offer strong returns to incentivize funding from institutional investors. These efforts can help ensure that capital flows to the front line of the fight against climate change—Africa.

About African Financial Companies

The AFC was founded in 2007 to catalyze private sector-led infrastructure investment across Africa. It is the second-highest investment-ranking multilateral financial institution in Africa. The AFC approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and promote sustainable economic growth. AFC invests in high quality infrastructure assets that provide critical services in core infrastructure sectors such as electricity, natural resources, heavy industry, transportation and telecommunications. Since its inception, the AFC has invested more than US$10 billion in projects in 35 African countries. www.africafc.org

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