The African innovations unlocking new pathways to scale access to climate finance

As the provider of food, nutrition, and jobs for millions, Africa’s food systems are a central pillar of livelihoods and GDPs across the continent. Yet, they are at the forefront of the global climate crisis.

Climate change has reduced productivity growth of African food systems by 34 per cent since 1961. Still, continued warming to 2C this century could cause crop yields to fall by up to 20 per cent by 2030, endangering countless lives and livelihoods alike.

In the face of this urgent challenge, there remains a huge gap in Africa’s current climate adaptation funding, estimated to be within the region of US$41.3 billion – annually – for the entire continent.

To bridge this climate finance gap, African countries must urgently adopt a range of innovative policy, financial, and institutional solutions to encourage more investment in adaptation. The recently released Malabo Montpellier Panel climate finance report analyzes policy and institutional innovations and programmatic interventions across four African countries to explore government actions toward leveraging international climate finance for food systems transformation.

Key recommendations from the report underscore the importance of securing timely, predictable, and sustainable access to finance to support adaptation across Africa’s food systems – buffering the main source of nutrition and livelihoods for many. Similarly, access to finance must go hand-in-hand with capacity building in national institutions across the region, in the public and private sectors, for sustainable outcomes.

To begin with, mobilizing greater private sector finance will prove essential in bridging the existing gap in adaptation finance. Private finance is an underutilized resource in African climate finance, yet the goal of greater adaptation for food systems cannot be achieved without it.

Currently, the African Development Bank estimates that about 75 per cent of the financing required for the successful implementation of Africa’s Nationally Determined Contributions (NDCs) – the climate commitments and goals of each individual country – needs to be provided through private investments. Despite this, there is also a lack of data to accurately capture the amount of private climate finance that is currently allocated to food systems, a fundamental drawback that must be resolved in bridging this financing gap.

Recent developments in private finance offer a path forward for unlocking future adaptation funding for African countries. For instance, the Food Securities Fund, developed by Clarmondial, provides working capital loans to agricultural aggregators such as cooperatives, processors, and traders in developing and emerging markets.

Secondly, African countries should prioritize blended finance models in raising more and better adaptation funding.

Blended finance models combine concessional capital from private or public resources to de-risk and “leverage” additional capital from other actors. Furthermore, blended finance instruments allow each party to accomplish their own objectives while at the same time contributing to common goals – in this case – climate adaptation.

According to the National Climate Funds Tracker, there are 12 national climate funds in Africa. National climate funds offer an important means to mobilize funds for adaptation by raising and blending capital from public and private sources.

Moving forward, African governments and financial decisionmakers should seek to prioritize blended finance models to boost adaptation funding. Ethiopia’s Climate Resilient Green Economy (CRGE) Facility, for example, offers a dedicated financing arm to coordinate the receipts and disbursements of finance from international sources to sectoral ministries for implementation.

Finally, African countries should adopt local climate finance models, to boost the climate adaptation of local communities who are ultimately on the frontlines of climate change.

At present, estimates suggest that only five per cent of all funding flows from international climate funds have been disbursed for locally based climate adaptation interventions on the continent. Essentially, the communities that most need this finance are not receiving it.

In 2017/18, climate finance globally reached only US$8.1 billion for small-scale farmers, agri-entrepreneurs, and other value chain actors serving them – despite their importance in adapting our food systems as a whole to the impacts of climate change. These figures were equivalent to only 40 per cent of the total climate funds committed to the agriculture, forestry, and land use sectors in those years.

Governments and financial sectors across Africa must take note of recent developments to grow the amount of climate finance reaching local communities. The development of the National Fund for Environment and Climate Change (FNEC) and Community Development Support Fund (FaDEC) in Benin, offer examples for how climate finance can help support the most vulnerable local communities more effectively.

To meet the adaptation needs of Africa’s food systems, an important paradigm shift amongst the finance community, and African governments, is needed; both groups are critical and need to complement each other to achieve collective aims.

Climate adaptation is not only an opportunity to address the impacts of climate change, but also serves as a springboard to unlock the potential of food systems to deliver for lives and livelihoods across Africa.

This article is also published by CNBC Africa. Illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.