At this year’s COP27 in Sharm el Sheikh, Egypt, the conference’s most significant achievement was the establishment was a fund for “loss and damage”, however, there was no agreement on cutting greenhouse gas emissions, leading many to believe that the goal of keeping global warming below the 1.5C threshold is now unattainable.
Countries agreed to establish a loss and damage fund for developing nations that have been struck by climate disasters such as flooding and other extreme weather events, financed by their developed counterparts. The agreement has been seen by many as an acknowledgement of the responsibility of history’s major polluters to finance the near-inevitable damage they will cause vulnerable communities in other nations.
In a year in which African nations have been hit hard by extreme weather events, conversations before the conference again turned to the unfulfilled promise of wealthy countries to finance climate projects in developing nations.
Extreme weather events in Sub-Saharan Africa have increased in frequency, destroying lives and displacing millions of people. The Horn of Africa region, including Somalia, Ethiopia, and northern Kenya, is suffering from the worst drought to impact the region in 40 years. Meanwhile, catastrophic floods have hit West Africa. In southern Nigeria, flooding has caused more than 600 deaths, 1.4 million displacements and devastation to farmlands and crops.
In order to mitigate these disasters, emissions must fall and adaptation projects must be accelerated. However, African nations face climate finance investment gaps that are a hindrance to implementing their NDCs and meeting their 2030 climate goals. The African Development Bank has said the African continent faces a climate financing gap of about $108 billion each year.
As a result, insufficient levels of green finance have been a key theme of this year’s conference, and improved commitments to providing climate finance have been a key demand for governments, civil society, business leaders and climate activists alike. Other estimates have said that Africa requires $2.8 trillion between 2020-2030 to achieve its climate goals, and the expansion of the private and financial sectors’ contribution to meeting these goals, through the financing of sustainable projects is crucial to closing these investment gaps.
With this in mind, the pledges of more than $230 million to the Adaptation Fund, which aims to help at-risk communities adapt to climate change, were welcomed. Additionally, over 85 insurers in Africa agreed to create African Climate Risk Facility (ACRF), a regional market-based funding tool which will provide $14 billion to assist vulnerable communities in African countries.
Rwanda has been a leader in promoting public-private partnerships and blended finance instruments to accelerate investment into sustainable projects. The country’s financial sector launched its sustainable finance roadmap in partnership with the United Nations Development Programme on Finance Day at COP27. The Kigali International Financial Centre (KIFC) aims to attract private equity to Rwanda which will finance sustainable development, and the roadmap defines its goal to turn Rwanda into a sustainable finance hub, setting out the major steps, strategic objectives and milestones needed to transform Rwanda into the ideal destination for sustainable investments.
In recent years, Rwanda has made significant commitments to reducing its emissions and promoting sustainable development, and Rwandans believe that businesses can be a catalyst for the global community’s transition to sustainable development while driving the green agenda.
As delegates look toward next year’s COP summit in the United Arab Emirates, countries such as Rwanda will be hoping a broader agreement can be reached on cutting carbon emissions.
By Jack Seal