African Development Bank rapidly exceeding climate finance targets
African Development Bank Group President Akinwumi Adesina on Thursday called for more urgent action as climate change continues to wreak havoc in many African countries.
He was speaking at a high-level roundtable on climate finance convened during the International Monetary Fund and World Bank Spring Meetings by UK Deputy Foreign Minister and Minister of State for Development and Africa, Andrew Mitchell, and the German Minister for Economic Cooperation and Development, Svenja Schulze,
Adesina said the ongoing devastating drought in several parts of Africa underscored the need for all stakeholders to come together to accelerate support and financing for Africa.
“Africa is in the eye of the storm from climate change, accounting for 9 out of the 10 most vulnerable countries to climate change globally,” Adesina told participants. He added: “But Africa is not getting what it needs to adapt to climate change. Africa received just $30 billion per year for climate adaptation, while its needs are $277 billion per year, leaving a huge financing gap.”
The African Development Bank has scaled up climate finance and is exceeding its financing targets for African countries. The Bank has launched several innovations to mobilise resources that will help scale up climate finance. These include a recent $750 million hybrid capital issue in the global capital markets, the first of its kind among multilateral development banks. The initiative was oversubscribed at $6 billion.
The African Development Bank’s room-to-run transaction, with a $2 billion guarantee from the United Kingdom, unlocked an additional $2 billion for the Bank to devote to climate finance.
Adesina said the African Development Bank was delivering on its promise. He said: “The African Development Bank set a target to devote 40% of its total financing to climate finance. We have exceeded this target consistently in the past three years, consecutively, and stood at 55% in 2023.”
The roundtable included interventions by World Bank Group President Ajay Banga, Prime Minister Mia Mottley of Barbados, Global Center on Adaptation CEO Professor Patrick V. Verkooijen, COP29 President Mukhtar Babayev, and ministers from Germany, the UK, Malawi, Kenya, Uruguay, Norway, Vanuatu, and Bangladesh. There were also interventions from heads of the Asian Development Bank, United Nations Framework Convention on Climate Change (UNFCCC) Executive Secretary Simon Stiell, and Green Climate Fund Executive Director Mafalda Duarte.
The meeting highlighted the urgency of partnerships and collaboration to deliver climate finance to countries that need it most, including building capacity in these countries to better use these funds, develop bankable projects, and support smallholder farmers.
World Bank Group Ajay Banga encouraged stakeholders to remain determined to move forward despite existing frustrations. He said: “The first thing is not just to raise money, but to raise the capacity of countries in terms of getting bankable projects and also the capacity to execute them. We need to find a way to support countries with knowledge.”
Climate Action Window supporting Africa’s most vulnerable countries
In response to the calls for reform of the global financial architecture, Adesina said the African Development Bank had innovated and created the Climate Action Window as part of the 16th replenishment of its African Development Fund. He described it as “first among all multilateral development banks”.
With initial funding of $429 million from development partners Germany, the UK, The Netherlands, and Switzerland, the African Development Bank plans to increase this to $13 billion.
Adesina told the audience: “The Climate Action Window will directly support the low-income and most vulnerable countries on climate adaptation, mitigation, and technical assistance. The first call for proposals for adaptation elicited $4 billion of projects, ten times the size of the total facility, confirming the massive demand for adaptation finance by countries.”
To further leverage climate finance, the African Adaptation Acceleration Programme—the flagship programme of the African Development Bank and the Global Center on Adaptation—is mobilising $25 billion for climate adaptation. It is the largest climate adaptation programme in the world.
Speakers at the roundtable described the situation as dire and underlined the urgent need for stakeholders to work more collaboratively as a system. This includes forward-looking and country-led planning, policies, and partnerships to maximise support and climate finance from financial institutions and the private sector.
Kenya’s Cabinet Secretary for National Treasury and Economic Planning, Njuguna Ndung’u, called for massive funding to finance adaptation programmes, highlighting the link between climate change and development.
Ndung’u said: “We also need to demonstrate that we have projects that can work, adding that the country’s Renewable Energy Integration (REI) investment programme allows national governments and country levels to commit resources. It helps us find national solutions.”
Finance Minister Jon Salong Dahmasing of Vanuatu echoed this message, highlighting how small island developing states constantly need to respond to emergencies. He said this makes it difficult for them to focus on the Sustainable Development Goals.
“We have capacity limitations making it difficult to access funds unless we have capacity support, including capacity to deliver bankable projects and how to access the funding that is available across the world,” he said.
Malawi’s Minister of Finance and Economic Affairs, Simplex Chithyola Banda, spoke about the impact of climate change and natural disasters on development.
Citing how Malawi has been hit by natural disasters for the past three years, he said, “This has become the enemy of development. … Our recent disaster means that we need to benefit from climate finance. The moment a natural disaster hits us, it has an immediate impact on our economies. It pushes many more of our people into food insecurity.”
Speaking earlier, UK Minister Andrew Mitchell stressed the urgency of getting the world to unite to finance adaptation.
Double Adaptation Finance
He explained that adaptation required critical global attention, stressing that the next few years would be critical for developing countries facing natural shocks.
Mitchell said: “We need to collectively deliver on the COP26 pledge to double adaptation finance by 2025. We need to work on meeting the COP 26 targets… We are seeing the devastating impact of climate change in the developing world. Humanitarian crises are getting more frequent… and we fear that they will get worse.”
He told the roundtable that the UK was going further by tripling adaptation financing, the majority of which will be by grants.
German Minister Svenja Schulze described 2024 as a critical window of opportunity to reform the global financial architecture. “Adaptation financing urgently needs our attention,” she said.
Prime Minister Mia Mottley of Barbados echoed the importance of a creative collective approach to tapping the significant amount of money in the global community, pointing out that “We are racing against time…” She also stressed that it was time to realize that outdated models of development assistance were not appropriate to tackle the very different kinds of development challenges faced today by countries of the Global South than those that existed when the international development institutions were originally established.
The CEO of the Global Center on Adaptation (GCA), Professor Patrick V. Verkooijen underlined the urgency of global adaptation financing as well as country investment plans for adaptation.
Verkooijen said: “Let us put this into context. Developing countries need $3.3 trillion in adaptation finance over the next decade to 2035. Adaptation finance must quadruple, not by 2035. Today. And if we look at Africa, the situation is even more dire… Our key message is simple: Everybody must invest more in climate adaptation globally and in Africa.”
He highlighted how the Africa Adaptation Acceleration Program model with the African Development Bank and African Union was delivering good results, “the Africa Adaptation Acceleration Program must grow exponentially. It needs to be turbocharged.”
