The KEPSA Environment Water and Natural Resource’s Sector Board in partnership with the Global NDC Implementation Partners (GNIplus) and Kenya Climate Innovation Centre Consulting (KCIC Consulting Ltd.), organised a workshop on the tracking of climate-related investments in Kenya on 30th January 2020 at the Raddison Blue Abboretum Hotel. While Kenya’s private sector is vulnerable to climate change, it also has the ability to make an impact and help deliver on the NDC. The Private sector has particular competencies to deliver the low carbon development pathway. The Climate Change policy frameworks recognise opportunities for the private sector to access new and innovative sources of finance, as well as other opportunities; generating carbon credits, creating green jobs, undertaking low carbon development innovation and low carbon research. To reduce GHG emission in line with the ambitions of COP21 – the private sector is starting to set low-carbon targets
In his opening remarks, Mr. Mairura Omwenga, a KEPSA member and CEO of Town Planners Association of Kenya said that KEPSA has taken a leading role shaping the policy and legal landscape in Kenya including contributing to the development of the first and second National Climate Change Action Plans (NCCAP), National Adaptation Plan and Climate Change Act. The private sector is also represented at the National Climate Change Council. There is however need for increased private sector engagements and capacity building for the private sector in the climate change discourse.
Anna Balm the Project Manager for (GNIplus) stated that ‘’Climate Finance Tracking is a domain in which Climate policy Initiative has been leading for 8 years. We have produced landscapes of climate finance flows for countries in Europe, Asia and Africa’’, she noted. Its latest global study shows that the 2018 annual flows rose to over half a trillion dollars representing a 25% increase from 2016. However, it was half a trillion dollars which is still very far from what is needed for a successful low-carbon transition. It is estimated that the need is as much as 3.8 trillion dollars annually just for the energy sector. The gap is even bigger when other sectors are taken into consideration, like transport, land use, agriculture, adaptation, etc. This shows the enormous investment opportunity that the low-carbon sector represents. However, it is also not clear in studies how climate finance is flowing at the scale or speed needed, particularly in Sub-Saharan Africa. In Kenya, (GNIplus) works in partnership with the Ministry of Environment and Forestry through the Climate Change Directorate, in collaboration with the National Treasury and relevant sectorial ministries, and other public and private stakeholders.
Mr. Edward Mungai, the CEO of Kenya Climate Innovation Centre (KCIC), made a rallying call that, “We should be talking about the climate crisis, not climate change anymore and the future lies with the private sector and financing. While financing is seen as the biggest roadblock to advancing and overcoming the challenge for the climate crisis, this shouldn’t be a challenge as there is plenty of money out there. The challenge is how to access the money’’. In January 2020, KCIC launched a report on the status of environmental management practices in Kenya. In the study, customers have said 66% will prioritise buying from environmentally sustainable companies. In 2016, the same study showed that 56% of customers would prioritise buying from sustainable companies. This demonstrates that there are a growing interest and concern in environmental issues and hence going forward businesses must be able to embed environmental practices in business practices.
On the Overview of the National Climate Change Policy and Legislative Framework – by the National Treasury, Mr. Hilary Korir highlighted that climate change is a major development issue and impacts the most sensitive sectors. Agriculture makes up about 25% of GDP, climate-related sectors are about 50% so the country relies heavily on climate-related sectors. Climate Change is estimated to cost about 2.4% of Kenya’s GDP each year. E.g. in the Financial Year 2017/2018 60 billion KES was spent on flooding, an additional 18.7 billion was used to fix roads destroyed by floods.
The sources and channels of climate finance are local, sub-national and national funds, transnational financing, drawn from public, private and alternative sources to be applied towards activities that reduce greenhouse gas emissions. The public sector plays a central role by leveraging private sector investments. E.g. the first green bond has been issued by Acorn, a Nairobi-based property developer. In Davos, there was an announcement that a sovereign green bond would be raised this year. The Issuance of the private sector Acorn green bond was a major milestone that demonstrated that the private sector is ready for sustainable investments.
National Policy on Climate Finance was finalised on 23rd February 2018 (and is revised every three years) – is an enabler for accelerating Kenya’s development aspirations under Kenya’s 2030 vision. The policy seeks to increase the country’s adaptive capacity and building resilience to climate change. The goals of the policy are to guide and promote climate finance flows in Kenya, tracking of climate finance through budget coding and enhanced private sector investments. A policy on Incentives for Green Technologies and Services is being developed. Finally, the Climate Change Fund has been put in place with a seed capital of 500 million KES by the National Treasury. The fund will finance priority sectors in adaptation and mitigation using loans, grants and equity.
Climate finance relates to the additionally, the part which is specifically allocated to climate mitigation or adaptation. Climate Relevant Expenditure (CRE) is defined as the costs incurred or invested in programmes and sub-programmes where actual or specific costs of climate change activities may not be specifically shown. Tracking and reporting climate finance is important because there is an increasing demand for transparency. When going to negotiations you need to know exactly how much has been spent and be able to report on international flows of finance. Tracking is also a cornerstone of data-driven decisions on climate investments. The climate change budget code report of 2015 proposed the introduction of segment 8 analytical segment within Single Chart of Accounts (SCOA) and mapped it into the IFMIS system. The ongoing revision of SCOA will include 8 segments to enable the tracking of all climate finance flows at the national and county level.
Benefits for the private sector from tracking Climate-Related investments in Kenya include: to show the gap between the need and the reality, empowerment to accessing more funding e.g. GCF and GEF, to inform and align policy development and to identify barriers that need to be unlocked. The findings of the Kenyan climate landscape study will inform the policy engagement for the private sector as well as facilitate and identify opportunities for investment in climate-related sectors.
Towards this end, (GNIplus) is working with KCIC Consulting and the National Treasury to map the landscape of public and private investment in climate-related activities in Kenya. We would greatly appreciate it if you would provide us with data relating to your organization’s climate-related investments and practices in 2018, by filling an online questionnaire by Thursday 20th February 2020. The questionnaire is available on this link: https://ee.kobotoolbox.org/x/#S0RWHMqV