Trillions of dollars needed to transition Africa to a low-carbon economy

Despite the rise in climate-related events such as extreme heatwaves and severe floods, climate finance inflows are still far from the trillions needed to achieve global climate goals. Pan African bank Absa has pledged to play a critical role in facilitating the transition to a low-carbon economy. In an exclusive interview with CNBC Africa, Msizi Khoza, Head of ESG at Absa CIB, shed light on the challenges hindering the flow of funds, the bank's commitment to sustainability, and its plans for the future. Khoza highlighted the unprecedented scale of the climate challenge, citing World Bank reports that identify the need for a massive reallocation of capital. Governments, corporations, and private entities are increasingly committed to climate action, but significant hurdles remain. Balancing short-term risks with long-term implications, particularly in the African context, poses a major challenge. Mitigation projects like renewable energy are more straightforward to fund compared to adaptation initiatives, where financing complexities abound. Absa has positioned itself as a key player in Africa's transition to sustainability. The bank has been a major financier of renewable energy projects, contributing over 5,000 megawatts of clean energy to the grid. With ambitious sustainable financing targets on track to be met ahead of schedule, Absa aims to ramp up both mitigation and adaptation finance projects. By decentralizing the energy grid and focusing on adaptation initiatives, the bank seeks to address a wider spectrum of climate challenges. Collaboration is essential in bridging the climate finance gap. Khoza emphasized the need for a 'whole of society' approach, involving not just banks and financiers but also governments and multilateral development banks. While Absa has made significant progress in mobilizing funds, Khoza acknowledged that no single entity can tackle climate change alone. A collective effort is required to pool resources and drive sustainable development initiatives. Regulatory frameworks play a crucial role in enabling finance mobilization. Khoza praised recent legislative milestones like South Africa's Climate Change Act but called for further enhancements to create a conducive environment for sustainable investment. Strengthening institutional frameworks and strategic plans at a national level can attract more capital, both domestically and internationally. As the world gears up for the upcoming climate change conference COP 29, Absa remains committed to advancing its sustainability agenda and collaborating with stakeholders to accelerate the transition to a low-carbon economy. With a comprehensive strategy that encompasses mitigation and adaptation finance, Absa is poised to lead the charge towards a greener and more resilient future.