Nairobi: The inaugural Africa Climate Summit held in Nairobi witnessed robust discussions on the potential of a common African currency as a key solution to address the continent’s pressing climate finance challenges.
Experts and ministers across the continent conveyed that such a currency could not only bolster economic growth but also enhance accessibility to capital markets and minimize risks for global investors. The overarching theme emphasized the importance of regional collaboration.
Dr. Mohammed Adam, the state finance minister from Ghana, elaborated on the significance of Africa having its own currency for trade. He asserted that this could be pivotal in leveraging private sector funds, and supplementing public finances in the ongoing battle against climate change.
“With a single currency, we can streamline intra-African trade, eliminating barriers and transactional costs. This move could potentially fuel economic growth and free up resources for pivotal investments in renewable energy and climate resilience,” stated Dr. Adam.
The sentiment of unity and strength associated with a unified currency was underscored by Dr. Monique Nsanzabaganwa, Deputy Chairperson of the African Union Commission.
“A common African currency can be emblematic of our collective strength and unity. This might also heighten our appeal to global investors,” she noted.
South Africa’s Minister of Environment, Forestry, and Fisheries, Barbara Creecy, pinpointed the glaring disparity in climate finance sources. Highlighting that a mere 14% of total flows come from the private sector in Africa, compared to a global average of 50%, Creecy emphasized the transformative potential of a common currency. Such a currency could bolster the stability of investment returns, enticing greater climate finance flows into the continent.
Touching upon the imperative to reconsider Africa’s debt trajectory, Soipan Tuya, the CS Environment, called for multinational banks to reevaluate their approach, ensuring African nations are poised to combat climate challenges without the weight of debilitating debt.
Leaders at the summit emphasized several pressing issues, from post-disaster financial system reforms to the criticality of the African Adaptation Initiative and the UNFCCC Loss and Damage Fund. The discussions culminated in an emphasis on prioritizing adaptation investment, given the stark financial gap Africa faces in its climate action efforts.
The African Development Bank’s projection underscores this gap, estimating climate disaster costs to range between USD 7 billion to USD 15 billion annually, a figure anticipated to surge to USD 50 billion by 2030. With the current annual funding at just USD 28 billion, the summit aims to catalyze a collective commitment, targeting an annual fund of USD 100 billion and rallying support from Multilateral Development Banks.
Furthermore, the spotlight was on private capital, approximated at a staggering USD 630 billion annually, especially its potential role in agriculture, a critical sector for the continent.