There is raising pressure on the rich nations to do more for the developing countries edging towards the global climate talks in November. Africa is getting just 12% of the finance it needs to manage the impact of climate change.
The budget for African countries to move towards greener technologies is around $250 billion, this will help adapt to the effects of climate change however the funding in 2020 was just $29.5 billion, according to a report by the Climate Policy Initiative.
Growing criticism towards wealthy countries for failing to meet a pledge made in 2009 to provide $100 billion annually to help poorer countries and the issue is likely to be central to discussions at the COP27 climate talks in Egypt.
According to the International Energy Agency, Africa produces less than 3% of its carbon dioxide emissions while having one fifth of the world’s population.
“Harnessing climate investment opportunities in Africa will require innovation in financing structures and strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen,” the CPI report said.
It cited a lack of skills, infrastructure, data and financial markets depth, governance issues and currency risks as holding back climate investment to varying degrees in African countries.
Most of the barriers were found in the central African countries, where infrastructure and access to credit is lacking and there are high risks of political and regulatory issues hampering investment according to the report.
“While these barriers are real, the perception of risk linked to investments in the African continent is often aggravated by a limited understanding of national contexts by private investors,” it said.
The uncertainty of the level of risk with investing in Africa may end up steering their capital toward other markets which are perceived as safer hence missing potentially profitable investments opportunities.
