17^th September 2022

FEEDBACK FROM AFRICA CLIMATE WEEK – UNDERSTANDING OPPORTUNITIES CHALLENGES AND DEBATES SURROUNDING JUST TRANSITION AND RELEVANCE TO BUSINESS

Climate change is one of the greatest threats to our global economy but tackling it is also one of the world's most significant economic opportunities. Climate threats are amplified on the African continent, where high social and economic vulnerability levels further exacerbate the transition risk and physical impacts. In the spirit of showcasing collaborative action in the face of climate change, the Kenya Private Sector Alliance in collaboration with the National Business Initiative (NBI) has partnered with the African Climate Foundation (ACF) to deliver a series of dialogues between African businesses across the continent, including South Africa, Egypt, Kenya, and Nigeria.

The dialogues provide an opportunity better to understand the broader African climate context and challenges, as well as to unpack climate responses and to share learnings on the different approaches to achieving Just Transitions across the continent. The first dialogue was held on 12^th September 2022, focusing on feedback from Africa Climate Week held in Gabon in August: key challenges, opportunities, and debates surrounding climate action and Just Transitions on the continent and their relevance for business in Africa.

The UNFCCC’s Climate Conference (COP27) is taking place in Egypt this year. This African COP is a pivotal moment for governments and businesses across the continent to showcase and position the range of climate investment opportunities in Africa and amplify the value of collaborative action.’ The private sector in Africa needs to have a coherent voice on issues affecting African business, especially of the pertinent African issues that are not reflected in the global platforms, said Reitumetse Molotsoane of the National Business Initiative (NBI) South Africa.

The contribution of the private sector to the climate change discourse in Kenya was presented by Faith Ngige – The Climate Business Information Network Kenya Coordinator. She indicated that the private sector in Kenya had actively been involved in shaping the policy and regulatory framework for climate change in Kenya. This included participating as a task force member for developing the National Climate Change Response Strategy 2010, National Climate Change Action Plan I (2013-2017); National Climate Change Action Plan II (2018-2022), among others.

In addition, with the support of the GCF funding through the National Treasury and Planning, the Ministry of Environment and Forestry and the Food and Agriculture Organization, the private sector in Kenya has developed the Private Sector Strategy on Climate Change Solutions (2022- 2030) as well as had established the Climate Business Information Network Kenya that brings together business that has integrated climate change in their business strategy and value chains. In 2021, the private sector in Kenya committed to the 10-point charter dubbed 4CK – Corporate Commitment to Climate Change.

The private sector in Kenya was delighted to be part of the African business that is shaping the unified voice for the private sector ahead of CoP 27, which will take place in Egypt this year. KEPSA will continue with its mandate to make our planet a much better place in matters relating to climate change

Ms. Joanne Yawitch, the Chief Executive Officer (CEO) of the National Business Initiative (NBI- South Africa), in her opening remarks, emphasized on the significance of partnership and collaboration and was delighted to partner with Africa Climate Foundation, Kenya Private Sector Alliance, Nigeria Economic Summit and other to the private sector across Africa in crafting the private sector contribution to addressing climate change.

The welcome remarks of The African Climate Foundation were made by Mr. Saliem Fakir, who indicated that it is essential that Africa can articulate her needs, strategies, and vision for the new economic transformation. Dr. Tayo of the Nigeria Economic Summit highlighted the progress made by the private sector in Nigeria, including the private sector-led renewable energy round table, climate resilient agriculture, and the need to rethink approaches for advocacy on private sector-led voice.

Eng. Ahmed Kamal of the Federation of Egyptian Industries (FEI) presented an overview of the present sector participation in CoP negotiations. He said that it was not until 2018 that the private sector in Egypt started participating in climate change issues. This voice must gain space in CoP negotiations, whose resolutions is determined by governments to a great extent. It is time the private sector gained a seat at the main CoP negotiation table.

REFLECTIONS OF THE AFRICA CLIMATE WEEK: GABON

The Africa Climate Week took place in Garbon in August 2022. Ms. Hannah Ryder, CEO of Development Reimagined, shared the overview in five thematic areas: Just Transition, Nature Based Solutions, Adaptation and Loss and Damage, Public Financing, and Private Financing. These were expounded as follows:

• The Just Transition thematic area focused on energy and access to gas. Interpretation of just transition varies from country to country. Most African countries have developed ambitious targets for their nationally determined contribution—Kenya, for instance, targets a 100% transition to clean energy by the year 2030. The emphasis of the just transition is on what the transition means for industrialization and manufacturing capabilities for Africa. Just transition should aid the industrialization of Africa.
• Adaptation, Loss, and Damage- whereas Africa challenge to a large extent adaptation, the funding is mostly directed to mitigation actions. Businesses are facing climate risks including flooding and other climate related impacts.    Though the global adaptation funding was established during CoP26, the fund was not enough to bridge Africa’s adaptation needs.   
• Public Funds:   Public funds alone will be insufficient to meet adaptation needs significantly as costs will increase along with global warming effects. The challenge is that private investment activity is unevenly distributed while the private sector accounts for 85% of all investments worldwide and represents close to 75% of global climate finance flows.
• Nature-based solutions: There are significant opportunities for the private sector around nature-based solutions for delivering mitigation, adaptation, and broader socio-economic benefits to the continent. One example of this is driving carbon offsets through forestation and reforestation.
• Private Financing:  Dr. Njoroge, Team Leader, Africa Green Finance Coalition representing KEPSA in the meeting, reflecting on outcomes of Africa Climate Week, indicated that the mobilization of private finance through bilateral and multilateral financial support in Africa is significantly lower than in other global regions. Between the years 2016 and 2018, Africa made up only 17% of mobilized private finance relevant to climate change, leading to a significant funding gap.  The situation needs to change. But to make this change happen, public mechanisms for enabling the environment should be implemented to leverage private sector finance for adaptation optimally.
• Enabling initiatives to reduce regulatory, cost, and market barriers through blended finance approaches, public-private partnerships, or innovative financial instruments and structures supporting private sector requirements for risk and investment returns, such as green bonds. The private sector should be involved in adaptation discussions as regulations around climate change increasingly affect their investments. Without participation, the sector will be unable to shape the investments needed and participate effectively in the opportunities and risk mitigation efforts.

ROLE OF BUSINESSES TO IN CLIMATE CHANGE ACTION, AMBITION, AND JUST TRANSITION   IN AFRICA

Dr. Tayo – Chief Operations Officer, Nigeria Economic Summit shared the significance of the private sector in the design of long-term strategies. Nigeria’s Long-Term Strategy (LTS) covered on key work plans of governance, qualitative assessment, stakeholder engagement, and innovation. 

The private sector is very critical in offering climate change solutions and financing. The private sector is a catalyst for distributing goods and services and therefore building the resilience of businesses is key in designing solutions for climate change. It is important that Africa’s Long-Term Strategies on Climate Change also focus on incorporating measures for reducing vulnerability and building the resilience of businesses.

As businesses seek to reduce risks, what process should they follow?  What are the indicators of resilience? What new markets and innovations are required? What capacities should be enhanced for the private sector to understand the concept of loss and damage? Posed Dr. Tayo.  The long-term strategies must include the private sector voice.

Eng. Ahmed Kamal stated that the private sector must be involved in the participation and negotiations for Climate change. In addition, Dr. Mwangi Njoroge Climate Expert representing the Kenya Private Sector Alliance highlighted that CoP27 is the CoP of implementations, and a tangible output is expected.  He highlighted that Africa needs about three trillion dollars to achieve the Nationally determined contribution (NDC). Therefore, a gap of 1.3 dollars exists, which cannot be provided by public finance. The private sector, therefore, needs to play a role in bridging the gap.

 The private sector covers only 5% of financing for the NDCs. There is a need to mobilize resources from international or domestic sources to bridge this gap. There is a need for integrated financial frameworks, including national and international sources. He urged the private sectors to communicate in a language that can attract investors to climate change solutions and develop dedicated financial and investment instruments for climate change.

Other innovative financing approaches to attract institutional investors include green bonds, carbon markets, and insurance for loss and damage. Transforming Africa's economy should be undertaken using just and affordable strategies. Governments should also play a key role in mobilizing financing for climate change in their respective countries.

Conclusion and Way forward 

Ms. Reitumetse highlighted that just transition would require redefining economies and livelihoods. It is, therefore, imperative to understand the complexity of the transition envisioned, articulate the degree of accountability required for the developed world, and articulate Africa's needs and expectations.

The business voices are therefore very fundamental in developing organized interventions. The meeting was concluded by Ms. Geeta Morar, who presented the overview of the   Africa Collaboration Road Map to CoP 27 events and initiatives. The next Africa Business Dialogue Meeting will be held on 22nd September 2022.