The Minister for Finance, Mr Ken Ofori-Atta, has called on industrialized nations to fulfil their promise of US$100 billion per year to finance climate change.
He noted that with rising debt levels and borrowing costs, climate action in Africa must be funded through more equity investments and concessional financing.
“This necessitates substantial, accessible and predictable inflows of conditional finance. Despite Africa’s immense potential for green investments, the continent currently attracts less than one per cent of global green bond issuances, estimated at US$600 billion,” he noted.
Mr Ofori-Atta, who spoke at a high-level leader’s meeting during the 2023 United Nations General Assembly in New York, said more financing should flow to support Africa’s adaptation and accelerate its mitigation.
According to the Minster, only seven out of 23 countries have met their fair share of commitments, leaving Africa in need of substantial additional support.
Additionally, the cost of African green bond issuance is more than double that of similarly rated peers, hampering the region’s access to climate financing.
To overcome these obstacles, Mr Ofori-Atta stated the need for appropriate vehicles to channel climate finance and strengthen domestic capacity, ensuring that African countries attract climate financing.
“The international community, including the private sector, must rally around a solution that ensures African economies are not shut out of green finance opportunities due to perceived ‘riskiness’,” he noted.
In addition to debt-for-adaptation swaps and credit enhancement, he highlighted the role of carbon markets.
When carbon markets are properly designed and integrated, they channel private finance toward profitable and sustainable activities, bridging the gap between environmental goals and financial interests.
The interconnected nature of these markets can create larger, more liquid markets, drawing in more participants and investments while addressing multiple Sustainable Development Goals.
The Minister further endorsed the Nairobi Declaration, which calls for a global carbon taxation regime and carbon tax on fossil fuel trade, maritime transport and aviation.
That would provide dedicated and affordable finance for climate-positive investments at scale, with a focus on ring-fencing these resources to ensure they are used for the benefit of Africa and its climate action goals.
Joyce Adwoa Animia Ocran, ISD