Africa remains the most affected continent by the global climate crisis, adding a considerable drain on its public finances and growth trajectory. Increasing cost of living has also impacted the macroeconomic conditions of most African countries worsening debt vulnerability and fiscal distress in their financial structures.
Statistics from World Bank show that Kenya’s annual climate and nature financing gap is Sh775.1bn ($5.13bn), which is more than the country’s development budget of Sh743.5bn in the current financial year.
Data from a private sector player, Engie Energy Access, also paints a gloomy picture of ‘sustainable climate’ indicating that Africa’s past and current contributions to global carbon emissions are below 3%, which is an indication that the continent is at the receiving end of devastating climate change impacts.
Off-grid bottom of the pyramid access to finance therefore remains essential to achieving SDG7 (Affordable & Clean Energy) in the continent.
“Last mile distribution is a major constraint in Africa towards sustainable and economical solutions to reach universal energy access of which climate financing plays a key role,” George Mudhune Engie Energy Access head of wholesale and partnerships for Africa said during the Africa Climate Summit 2023 held last week in Nairobi thanks to International Finance Corporation and Central Bank of Kenya.
Mr Mudhune added that while finance mobilization from international public sources is critical, complimenting efforts are needed from the private sector if the current climate financing gap is to be bridged.
“Patience, consistency, and steady focus are required as the due diligence to secure financing takes a long time,” he added.
Mudhune provided an African perspective on how the company he is steering (Engie Energy Access) has mobilized climate finance for its projects in Africa.
On key learning on climate financing, he points out that entities seeking to access climate finance must have solid market insights, research-driven consumer product needs, practical business models and strong business ethics in order to create an impact on the lives of millions of people in Africa who need access to affordable and clean energy.
During the summit, CBK Governor Kamau Thugge said that scaling up sustainable climate financing in renewable energy projects remains a challenge to African countries.
“We call for collective global action to mobilise the necessary capital for both development and climate action, echoing the statement of the Paris Pact for People and the Planet, that no country should ever have to choose between development aspirations and climate action,” Thugge said during the closing of the summit.
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