Objective of the study
Finance in support of technological and societal changes for a net-zero, climate-resilient future is a contested political battleground globally. Climate finance is a delicate policy issue, where even the definition is contested: Distributional conflicts are determined by which financial flows should count as climate finance, with further procedural and recognitional legitimation questions including Who gets what? Who qualifies to unlock funds classified as climate finance, and how?
This report investigates the emerging climate policy arena and maps actors, coalitions and contestations associated with implementing nationally determined contributions (NDCs) in Africa. We focus on the current status, practical experiences and perceptions of state and nonstate actors in Africa in securing climate financing to implement the NDCs. While there is no broad global consensus on the definition of climate finance, the closest is provided by the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC defines climate finance as “local, national or trans-national financing—drawn from public, private and alternative sources of financing—that seeks to support mitigation and adaptation actions that will address climate change”.1 Another definition provided by the UNFCCC Standing Committee on Finance (SCF, 2014)2 is as follows: climate finance is financing “that aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing [the] vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts”.
Africa is one of the world’s most vulnerable regions to climate change. The Glasgow Climate Pact agreed at COP26 resulted in global governments pledging to phase down fossil fuels and increase financing for climate change adaptation. Likewise, developed economies pledged to double their support from 2009 levels by 2025. However, Africa remains highly dependent on external financing to implement its NDCs and meet net-zero goals under the 2015 Paris Agreement. Meeting those goals is also confounded by the limited fiscal space available to governments in the sub-region to implement the NDCs. We undertake this study within the context of limited domestic fiscal resources and a challenging external environment with the aftershocks of the ongoing Russia-Ukraine war.
The report focuses on two areas:
- Global narratives on climate change and climate finance and its application to Africa. We analyse how global climate financing categorisations (for example, adaptation versus mitigation and loss and damage) feed into how stakeholders conceptualise these issues at the African country level. These global norms are further tested against country-level developmental objectives such as the twin issues of energy poverty and affordability and the pursuit of low-carbon industrialisation.
- Deep dives on three countries (case studies): Ghana, South Africa and Zambia. These countries allow us to provide a nuanced picture of which set of factors are driving both flows into and demand for climate finance in some archetypal countries and what valuable lessons could be learned to shape continental climate financing policy. Based on the analysis and these case studies, this report builds an evidence base on climate finance needs, perceptions, challenges and solution pathways.
The methodology used in producing this report encompassed qualitative, quantitative and political economy analysis. First, we conducted an extensive literature review to understand the main stakeholders and their responsibilities or mandate concerning climate finance policy formulation and investment attraction on the continent. We then undertook selected stakeholder interviews with individuals and organisations engaged in the respective national policy debate on these issues at the country level. This exercise also helped identify possible misalignment in stakeholder interests and motivations vis-à-vis climate financing and the energy transition.
That research was followed by an analysis and reconciliation of climate finance information collected from multilateral, bilateral and national stakeholder institutions. The findings from the qualitative and quantitative analyses were further analysed using a Problem-Driven Political Economy Analysis (PDPEA) to identify the root causes or bottlenecks to attracting and accessing climate financing. They thus allow us to propose possible intervention areas (recommendations).
We expect the report to contribute to discussions before and during COP27 by providing empirical evidence to support negotiating positions around equity and fairness in accessing finance and effectiveness.
