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Why AfDB is providing climate finance
Kenya Forest Service Chief Conservator Alex Lemarkoko (centre) and other senior officials tour Menengai Forest in Nakuru to inspect installation of a 55kilometre electric fence funded by the AfDB to a tune of Sh106 million.
In a recent opinion article, Danish think tank leader, Bjørn Lomborg, claimed that development institutions are increasingly turning away from poverty-related ills like hunger, infectious diseases, and illiteracy to divert resources to climate policies with “much fewer benefits” instead. In the article, he criticises the African Development Bank (AfDB) for “putting climate policy ahead of core development issues”.
This could not be further from the truth! On the contrary, by attributing more climate finance to its development projects, the AfDB is not only achieving a higher level of sustainable development for the continent, but also safeguarding its past development gains amid the ravages of climate change.
The AfDB Group rarely, if ever, finances a project whose sole aim is to address climate change. Rather, consistent with its mandate, the body recognises climate change as a cross-cutting issue and invests in development projects with climate change benefits. This is most appropriate as the continent faces increasingly frequent and more severe weather events, with no respite in sight amid more adverse climate change, including a continent warming 50 percent faster than the global average.
Africa’s extreme vulnerability to climate change is starkly evident from recent events. Last year’s cyclone Freddy made landfall in Southern Africa twice in a month causing over 1,400 deaths and damages of over $650 million. The destruction caused by the recent floods in Kenya and Tanzania is still very fresh in our minds while, Southern Africa is currently suffering from the ravages of a severe drought.
This is the reality within which development projects in Africa must be realised. And that is why development outcomes and addressing climate change are intimately intertwined. A number of recent events show the correlation between development finance and climate additionality.
In 2019 hurricanes Idai and Kenneth caused death to over a thousand people and more than $2 billion worth of infrastructure and property was destroyed, thereby reversing gains that Mozambique had made in the past.
Knowing the pattern of cyclones in Mozambique, AfDB can support investment in climate resilient infrastructure, such as power stations, roads and bridges, power transmission and distribution networks, or housing to make them less susceptible to the impacts of future cyclones. In this case, the climate additionality or portion of the resources that would go to strengthening the infrastructure so that it can withstand damage amid future cyclones, would be categorised as climate finance.
Many readers of the Business Daily might recall the devastating impacts of locust invasion in East Africa four years ago. The locust invasion could have been averted or the impact minimised if relevant countries had functional early warning systems and associated institutional capacities. The resources allocated to strengthening the national and regional meteorological services to provide Early Warning Systems and institutional strengthening as part of an agricultural or water project counts as climate finance too.
Moreover, Africa has abundant solar potential that can be used for power generation, which would increase the population’s access to electricity. While a solar power project will ultimately reduce or avoid emissions compared to conventional energy or fossil fuel sources (climate mitigation), the main goal for such investment would be to facilitate the benefits accruing from access to electricity.
The project would thus simultaneously contribute to development and climate outcomes, i.e, increase access to a cleaner source of electricity and a reduction of greenhouse gas emissions.
The African Development Bank would therefore be most negligent if it did not take climate change and its impacts into account in the design of its projects as it has become the highest risk amplifier for socio-economic development on the continent.
Within the context of the development projects financed by the Bank, resources are therefore attributed to addressing these adverse impacts and help build resilience for countries.
These are the resources that count as climate finance, and whose attribution has been reported as such since 2011 in accordance with the joint Multilateral Development Bank principles on climate finance tracking and reporting. It is not that resources are set aside for “climate” projects or policies. Rather, the Bank invests in development projects that also deliver climate co-benefits.
The foregoing shows that integrating climate change considerations into the design of development project results in significantly improved development and sustainable outcomes. This is why the African Development Bank attributes an increasing amount of its annual investments as climate finance.
Dr Kariuki is the Vice President, Power, Energy, Climate and Green Growth, at the African Development Bank. Mr Jørgensen is the Minister for Development Cooperation and Global Climate Policy, Denmark and Governor at the African Development Bank.
