What you need to know:
- Africa has great potential for green economies, particularly in wind and solar energy. Investing in energy transition technologies creates more jobs than fossil fuels.
- To achieve this potential, global financial reform is necessary to lower the cost of capital.
Around 80 years ago, representatives from various countries collaborated to create a new system to prevent scarcity, poverty and instability that had contributed to the onset of World War II. This resulted in establishment of the World Bank, International Monetary Fund, and other institutions to prevent crises and promote growth. This system helped facilitate Europe's post-war recovery, Asia's emergence and a significant reduction in poverty for many years.
Our current institutions fail to address our planet's pressing needs and people's needs. In particular, they are falling short in the fight against extreme poverty and climate change. Millions of people in Africa still lack access to affordable and reliable energy, hindering their economic opportunities and making it difficult for them to adapt to the impacts of climate change. The Global South bears the brunt of climate change's effects despite contributing minimally to its causes.
For example, Africa is responsible for less than three per cent of global carbon emissions. Nevertheless, the consequences of climate change in Africa are severe, with countries like Kenya, Ethiopia and Somalia experiencing devastating droughts. Over 140 million Africans are currently at risk of starvation.
The finance system needs reform to tackle crises. African leadership and ideas are key. We must address issues like clean energy and sustainable economic growth for low-income nations.
Africa has great potential for green economies, particularly in wind and solar energy. Investing in energy transition technologies creates more jobs than fossil fuels. To achieve this potential, global financial reform is necessary to lower the cost of capital.
The world must create a new international financial architecture that provides sustainable, lower-cost lending that spurs longer-term investments. That means funding global public goods for energy transitions, pandemic response and prevention and more.
It means expanding multilateral development bank balance sheets by aggressively implementing new capital adequacy approaches, creating, reforming or scaling instruments to mobilise more significant private sector investment, and updating mechanisms for climate vulnerability such as loss and damage waivers and natural disaster debt clauses. These reforms could help mobilise more and better-quality financing to help vulnerable countries address climate change and restart development.
This year is key for making progress toward these reforms. The diplomatic calendar includes many opportunities for government leaders, civil society members and experts to discuss the reform of the global financial system. Several weeks ago, over 40 world leaders came together in Paris to take steps toward financing a response to the linked crises of climate change and poverty. While the summit strengthened the international consensus for reform, it yielded only a few tangible results.
That makes the next gathering – the African Climate Summit hosted by President Ruto of Kenya and the African Union Assembly- even more critical.
This is Africa's opportunity to reimagine the development finance system to ensure it meets our needs. This moment is long overdue. Even before the start of the Covid-19 pandemic, vulnerable people in low-income countries have been falling behind due to the effects of climate change and insufficient support for development. This is an opportunity to identify tangible solutions and catalyse meaningful change.
The Africa Climate Summit will be structured around a green growth agenda focusing on renewable energy transitions, green minerals and manufacturing, sustainable agriculture and infrastructure, and natural capital. This ambitious agenda could make Africa a leader in addressing climate change and supporting economic growth. We have the potential to transform the future for generations to come — we mustn't waste it.
As leaders from governments, international finance institutions, philanthropies and industry come together in Nairobi, they must listen to Africans and help us craft innovative solutions to climate change. The world must agree to deliver critical funding and reimagine our financial systems to meet the moment, protect the planet and lift the continent's most vulnerable people.
William is the vice-president the Rockefeller Foundation