ECA’s Adam on how to build forward for an African green recovery

Africa is grappling with a triple storm, as the COVID-19 pandemic has triggered a recession resulting in the loss of over 30 million jobs, a surge in poverty, and mounting debt pressures. In addition, the continent is also feeling the brunt of environmental crises, ranging from climate extremes to biodiversity loss. To shed light on the path forward for Africa's green recovery, Jean-Paul Adam, the Director of Technology, Climate Change, and Natural Resource Division at ECA, recently appeared on CNBC Africa. In the interview, Adam emphasized the immediate and significant impacts of climate change on the African continent, with some countries already allocating a substantial portion of their annual budgets, between 3 and 9 percent, to combat this existential threat. The director further highlighted the alarming projection that by 2030, countries in the Sahel region could lose up to 15 percent of their GDP due to climate change, underscoring the urgent need for adaptation measures. However, he noted that African nations face a stark disparity compared to more developed countries, lacking the resources and fiscal space required for swift and effective responses to climate challenges. Adam stressed the critical importance of sustainable financing to address climate change in Africa, acknowledging the structural constraints and limited resource base that hinder economic growth and environmental resilience. He called for a concerted effort to mobilize financing, particularly in the context of COP26, emphasizing the fulfillment of the promised 100 billion commitment to support climate adaptation initiatives. While recognizing the significance of this funding, Adam underscored the need for additional innovative financial mechanisms, such as green and blue bonds, as well as debt-for-adaptation swaps, to supplement existing resources and accelerate climate action. The conversation delved into the progress and challenges surrounding green bonds in Africa, with Adam noting the high cost of sovereign issuances on global capital markets and the imperative to enhance risk perception to attract investments. He proposed the establishment of a sustainable finance market in Africa, which includes the creation of a repo market to de-risk investments in green and blue bonds. Adam highlighted the potential of leveraging concessional resources from institutions like the green climate fund to bolster investment confidence and promote sustainable growth across the continent. Moreover, Adam presented compelling evidence from recent case studies demonstrating the economic benefits of investing in green sectors compared to fossil fuel-based industries. He cited examples where green investments in climate-smart agriculture, renewable energy, and nature-based solutions yielded significantly higher returns and job creation, emphasizing the value proposition of transitioning towards sustainable practices. Despite the challenges posed by existing economic structures and energy inefficiencies, Adam advocated for bold investments and policy reforms to unlock the transformative potential of green investments in Africa. As Africa navigates the convergence of economic, environmental, and social challenges, the call for a green recovery resonates as a beacon of hope and resilience. By prioritizing sustainable financing, fostering innovative solutions, and pursuing strategic investments in green sectors, African nations can chart a path towards a more prosperous and resilient future.