August 9, 2022

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African Countries failing on Climate Finance due to funding inconsistency

By Ange de la Victoire DUSABEMUNGU

Close observers of climate finance have revealed that the fact that some countries do not have the means to monitor the climate finances has led to inconsistency in climate funding or misallocation of the money that are intended to go to climate projects

They said until today there is a financing gap in projects related to climate mitigation and adaptation while many countries still misinterpret the Climate Finance aspects which are clear in the Paris Agreement.

This was revealed on Thursday, during a webinar session on the role of international climate finance, in greening public and private sector finance in Africa.

OECD data have shown that Africa has received almost up to 25% of climate finance between 2016 to 2019, roughly around 18.5 billion USD compared to Asia that have received even almost close to double that amount.

Although there may be inequalities in the allocation of funds for climate change projects, the fact that some countries do not have the means to monitor the climate finances has led to inconsistency in climate funding or misallocation of the money that are intended to go to climate projects.

“When it comes to how much is actually a controversial sort of question on the fight,” said Okechukwu Daniel Ogbonnaya, Country representative of the Global Green Growth Institute, Rwanda

Article 2.1c of the Paris Agreement calls on Parties to ensure that all finance flows whether public or private, existing or new are consistent with a pathway towards low greenhouse gas emissions and climate resilient development.

However, there is an absence of official guidance on how exactly finance flows can and should be made consistent.

“When you look at what is happening today, where some regions are even now tagging projects as climate finance while initially were seen as green projects, then you will start questioning if investments are going to those projects, then other regions might also follow the bandwagon.” Okechukwu said.

“So, OECD is one aspect or one area where you could see data that is a bit reliable, but also coming to the continent, we do have the African Development Bank, which also has its own process of tracking where money goes and could be done on climate finance.

So, for Africa, yes, the climate finance tracking with the logic used by the AfDB could be a good starting point to get these figures.” He added.

Speaking at the event, Ms. Teddy Mugabo, the chief Executive Officer of Rwanda Green Fund said “We’ve also had instances where some funds are actually going to support climate related projects, but they’re not being tracked because they know, it’s basically a partner that is provided funding through the Normal Treasury and so, if the Treasury doesn’t necessarily understand what climate is, then they won’t be tracked.”

Ms. Mugabo was giving examples on how misunderstanding on Climate Finance is one of the typical examples that are probably typical across Africa.

However, she said, the deployment of the MRV Tracking system in the Ministry of finance is one of the solutions on the side of Rwanda.

“…we’re developing an MRV tracking system, which will be sitting in the Ministry of Finance, and obviously working closely with FONERWA where we can now start tracking this money.” Ms. Mugabo explained.

“Having this MRV system not only tracks what has come in, but it is also able to monitor what happens on the ground. So, it’s basically a system that helps us monitor and record but will also be used to inform policy, because at the end of the day…it might also inform policymakers that maybe we’re not accessing enough funding to support our Climate Action Plan.!” She said,

“Maybe another thing I believe that having these systems you’re able to know how much funding is going into what priority, for example, if there’s a lot of money that is being provided to the energy sector, then it can also inform governments or especially ministries of finance, and see that okay, maybe we should refocus some of the financing in another sector that is not accessing.” Ms. Mugabo added.

According to the climate finance experts, Rwanda’s case is not similar to other African countries where the situation is still complicated.

Following COP 26, Rwanda has been selected as one of five pioneer countries to better understand how to improve access to international climate finance.

Mr. Jean Bosco Iyacu, CEO of Access to Finance Rwanda said “Rwanda is the first country in Africa to look at that aspect and ensure that whatever we do is aligned to Paris Agreement goals.

 “So, in Rwanda, as I said, we are not out of the risks of climate change and we have some sectors that are largest emitters of gas, and those are agriculture, energy, and transport and when you look at it …. We need close to 11 billion USD for the next eight years, up to 2030 really, for adaptation and mitigation measures and these can’t be done without the private sector playing a very important role.” He said

READ ALSO: World Resources Institute reveals gap in funding for AFR100 Programme

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