Africa is a vital actor in the transition to a low-carbon future
Experts from across the continent addressed the first Africa Renewable Energy Forum, organised by the United Nations Development Programme on the sidelines of the United Nations Climate Conference in Sharm El-Sheikh in November. Kwame Ofori Appiah reports their contributions.
One of the most pressing topics in the current global debate is the shift to more sustainable kinds of energy. Climate change and recent interruptions in energy supply have highlighted the critical need of this transition. With Africa being the source of massive amounts of the minerals needed to power the change, the world is now looking to Africa as a vital actor in the transition to a low-carbon future. Africa, however, receives only approximately 2% of total worldwide investment in renewables.
The United Nations Development Programme organised the first Africa Renewable Energy Forum on the sidelines of the United Nations Climate Conference (Cop27) in Sharm El-Sheikh, Egypt, to address some of the concerns surrounding Africa’s energy transition, particularly how it can and will be financed. The topic of the event was “powering development”.
Boosting Africa’s readiness for the future
In her opening remarks, Ahunna Eziakonwa, United Nations Development Programme Assistant Administrator and Regional Director for Africa, emphasised the importance of efforts to boost Africa’s readiness for the future. She emphasised that the main concerns are “how do we push African answers to this challenge; how do we build momentum that addresses the critical stumbling blocks that we confront; and, most significantly, how do we make Africa’s money work for Africa’s development?”
Ambassador Albert Muchanga, the African Union’s Commissioner for Economic Development, Trade, Industry, and Mining, reminded the audience that almost a billion Africans lack access to clean energy and must cook with fuels that are hazardous to their health. The majority of people on the continent lack access to power, undermining the effort for egalitarian development that touches every corner.
In the first panel discussion, Samaila Zubairu, President and CEO of the Africa Finance Corporation, argued that while access to finance appears to dominate the conversation, “the real lever for change for net zero is the architecture of the global supply chain, and we are not having those conversations… But it is the only one we need if we are serious about achieving net zero.” He added that because Africa has a lot of the resources needed for the energy revolution, the region must become a hub for renewable energy technology. It makes sense, he says, to link opportunities to Africa’s enormous resources and make the continent a leader in green energy technologies.
Breaking out of the ‘colonial trap’
Former executive secretary of the United Nations Economic Commission for Africa, Professor Carlos Lopes, emphasised the necessity of breaking the “colonial trap” and adding value to African products, notably its energy potential, which can serve as a springboard for industrialization.
On the question of financing the continent’s energy transition, Dr Hippolyte Fofack, Chief Economist and Director, Research and International Cooperation at the African Export-Import Bank, called for green funding to be directed to where it is most needed. Unfortunately, current statistics show that industrialised economies are receiving up to 76% of green bonds. He stated that the perception premium, which raises the cost of funding for African countries, should not be translated to green bond issuing.
African governments must also seek to combat capital flight and tax evasion, which account for approximately $2 trillion leaving the continent each year. Ahmadu Hott, Senegal’s former Minister of Economy,
Planning, and International Cooperation, stated that Africa might finance its transition by selling fossil fuels while relying on solar, wind, and other renewables for its own usage.
The Bretton Woods institutions should step up
In his contribution to the second panel discussion, Paulo Gomes, founder of Orango Investment and co-chair of the AfroChampion Initiative, argued that the Bretton Woods institutions – the International Monetary Fund and the World Bank – were established to help countries recover and to meet balance-of-payments obligations. They should see this period as an opportune time to use Special Drawing Rights to help finance renewables.
Creative methods are required
Gomes questioned the idea that private capital would be required to lead the effort to finance Africa’s shift to renewables. “I strongly believe that in this agenda for renewable energy, states will have to finance the predevelopment of many projects,” he stressed. According to Ibukun Adebayo, Director, Co-Head of Emerging Markets, London Stock Exchange Group, the continent does not have enough capital to meet the financing gap for renewable energy, which is estimated at $100bn per year for the next 10 years. Africa will need to develop creative methods to de-risk infrastructure investment in order to attract the type of finance it requires, he added.
A panel of young climate champions also spoke about the need for and their efforts to use innovation to address climate change in Africa, while in a video message, Damilola Ogunbiyi, special advisor on renewable energy to the United Nations Secretary General, urged all stakeholders to work together to make the energy transition a success that is inclusive and equitable. ■