Understanding Africa's climate finance landscape

Africa is facing a significant challenge when it comes to climate finance, as a new study reveals that the continent needs to increase its climate finance nine-fold to meet its 2030 goals. According to the study, Africa needs to spend about $277 billion per year between 2020 and 2030 to fulfill its Nationally Determined Contributions (NDCs) in combating climate change. However, the current annual climate finance flows to the continent are only at $30 billion, which is just a fraction of what is actually needed. This vast gap poses a serious threat to Africa's ability to adapt and mitigate the impacts of climate change. CNBC Africa spoke with Evans Osano, Director of Capital Markets at FSD Africa, to gain insights into the current landscape of Africa's climate finance and the necessary steps to address the shortfall. Osano highlighted several key points regarding the challenges and opportunities in Africa's climate finance sector. One of the key themes that emerged from the interview was the urgent need to attract more private capital into climate finance in Africa. Osano emphasized that while public sector sources contribute a significant portion of the climate finance, private sector investment remains low, accounting for only 14% of the total flows. This disparity is evident when compared to other regions where private sector investment in climate finance is at a much higher level, reaching up to 40%. Osano pointed out that improving the quality of investments in Africa is crucial, particularly in sectors like renewable energy and agriculture. While Africa needs to invest $13 billion annually in renewable energy, current investments fall far short of this target at $9.1 billion. Similarly, the agriculture sector, which is a significant employer in Africa, is only attracting 16% of the climate finance flows, indicating a substantial gap in funding for this crucial sector. Osano also highlighted the importance of data quality and transparency in tracking climate finance flows, especially in identifying the impact of investments from international sources like China. He emphasized the need for African governments to monitor and track their climate financing to ensure it aligns with the continent's priorities and sustainable development goals. Additionally, Osano underscored the need for African countries to collaborate and learn from each other to enhance their climate finance strategies and attract more funds. Looking ahead to COP27, Osano expressed expectations that climate finance would be a top priority on the agenda. He stressed the need for increased ambition and mobilization of private finance to bridge the significant gap in climate finance for Africa. The upcoming COP27, dubbed 'Africa's COP', presents a crucial opportunity for African countries to showcase their commitment to climate action and secure the necessary financial support to achieve their climate goals. As the continent gears up for this important global event, addressing the climate finance gap will remain a key focus for policymakers, investors, and other stakeholders invested in Africa's sustainable future.