Ghana faces uphill battle in financing $9bn-$15bn climate commitments amid economic crisis – Report
Ghana’s resolute commitment to slashing greenhouse gas emissions as per its obligations under the Paris Climate Agreement is encountering formidable financial challenges.
The government’s ambitious plan, comprising 19 policy actions, including 13 adaptation and 34 mitigation measures, necessitates substantial funding to achieve its climate targets.
According to a report by IMANI Africa, Ghana must cumulatively raise between US$9 billion and US$15.5 billion by 2030 to effectively tackle climate change threats.
This translates to an annual climate finance need of about US$1.94 billion. The government plans to raise about 60% of the climate finance needs from international private and public finance sources.
Unlike the trend in Africa, where more than half the climate finance were debt instruments, 72% of climate finance flows in Ghana were grants. Debt instrument financing was less than 20%, and national budget
spending was about 9% of the overall financing in the last decade.
About 91% of grant funding was spent on mitigation programmes, 7% on adaptation, and the remaining 2% was spent on technical assistance, financing, and sustainable development models.
Ghana currently finds itself in the throes of severe economic and financial turmoil, grappling with near two-decade-high inflation, local currency depreciation, and mounting debt vulnerabilities.
These daunting headwinds have significantly constrained Ghana’s ability to finance its Nationally Determined Contributions (NDCs), compelling the country to default on external debt obligations and seek recourse from the IMF, with approval secured in May 2023.
In the face of the country’s economic adversities, IMANI Africa’s report undertakes a comprehensive evaluation of Ghana’s readiness to finance its climate commitments.
The in-depth assessment aims to augment stakeholder awareness and understanding of the climate finance landscape, while simultaneously fostering demand-side accountability in Ghana’s climate governance.
Ghana’s laudable ambition to combat climate change through its NDCs is now intricately intertwined with the urgency to navigate complex fiscal challenges.
Striking a delicate balance between environmental imperatives and economic stability is paramount. As policy makers and investors deliberate on the way forward, the insights offered by IMANI Africa’s report will play a pivotal role in shaping sound decisions, steering Ghana’s climate resilience endeavors towards a sustainable and responsible future.
