November 29, 2023

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At Africa’s first climate summit, a clear call to the world: Invest in us

At Africa’s first climate summit, a clear call to the world: Invest in us

Heads of state from across Africa wrapped up the inaugural climate summit on Wednesday in Nairobi, Kenya, by issuing a declaration calling for an urgent restructuring of the way the continent’s wealthiest countries engage.

The declaration emphasized many times that Africa, rather than being a miserable victim, was poised to lead in clean energy and environmental stewardship. But to achieve this, the statement said, the world’s industrialized countries, which are largely responsible for the pollution that causes climate change, must first open up access to their wealth through investments, rather than canceling their aid contributions when disaster strikes.

This lack of financing is one of the biggest issues dividing rich and poor countries as the world struggles to reduce carbon dioxide emissions. This will be one of the main points of contention at the United Nations Global Climate Summit, which begins on November 30 in Dubai. The historic gathering in Nairobi was, in part, an effort by poor countries to amplify their argument.

At the event, investors announced up to about $23 billion that will be earmarked for projects including solar mini-grids, carbon markets and reforestation. But it was not clear how much of this money represented commitments, rather than intentions.

Kenyan President William Ruto, who acted as summit host and master of ceremonies, said Africa has 60 percent of the world’s renewable energy potential and nearly a third of the minerals needed to electrify industries that currently depend on fossil fuels that lead to global warming. . Meanwhile, 600 million people in Africa have little or no access to electricity.

“We have to go green before industrializing, not the other way around,” Ruto said.

Many African countries have long been considered risky by multinational lending institutions for infrastructure investments such as renewable energy due to concerns about economic mismanagement and heavy debt burdens, along with issues such as corruption and conflict.

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Dubbed the Nairobi Declaration, the document said it would serve as “the basis for Africa’s common position” ahead of the UN-sponsored climate talks in Dubai later this year.

The summit attracted tens of thousands of delegates from all over the world to the East African trading hub. His events, held at the Kenyatta International Conference Centre, the most iconic building in downtown Nairobi, a modern African-themed skyscraper built in the 1970s, looked like a trade fair, except that the main audience was banks, private equity firms and charities. and donor governments.

These potential investors, especially Western ones, have been asked to put their money where their mouth is.

Despite pledges in the past to pump more than $100 billion in climate finance to the world’s least developed countries, the rich world has largely failed to achieve these goals while investing trillions of dollars in renewable energy in its countries.

“Injustice is burning at the heart of the climate crisis, and its flames are burning hopes and possibilities here in Africa,” said UN Secretary-General Antonio Guterres, who was one of the many international dignitaries present.

The tension behind the summit was evident in speech after speech in which African leaders lamented the lack of urgency in delivering on funding pledges.

Some African countries have long relied on renewable energy for most of their power generation. In Kenya, Mr. Ruto said, more than 90 percent of electricity is renewable, largely from geothermal sources in the Great Rift Valley.

But outside the halls of the convention center, Kenyans were asking tougher questions about who the conference really served and its noble aims.

“The discussion of energy masks our economic crisis,” said Mordecai Ogada, a prominent Kenyan author and voice on environmental issues.

“Yes, we get most of our electricity from renewables. But we pay foreign companies to generate that power in exorbitant amounts of foreign currency.” “Manufacturing has become expensive, which leads to inflation. In terms of the lives of Kenyans, the source of energy is not material at all.

The Kenyan currency has lost about a third of its value against the dollar over the past two years, and Mr. Ruto has raised taxes on gas and on small businesses, exacerbating the cost of living crisis. More than eight in 10 Kenyans live on less than $5 a day, according to the World Bank.

The summit’s message of unity was somewhat undermined because senior leaders from some of Africa’s largest economies, including Nigeria, South Africa, Ethiopia and Egypt, did not attend. Nor did the leaders of countries that witnessed recent coups or involved in conflicts, such as Sudan, Niger and Gabon, attend the conference. Despite taking a leadership role in previous climate discussions, the President of the Democratic Republic of the Congo, Felix Tshisekedi, did not attend either.

At the heart of the demand of those present in the world was “soft” financing – essentially, loans at below-market interest rates and with more lenient repayment schedules. Huge amounts of concessional financing could come in the near future from the World Bank and the International Monetary Fund, among other major lenders, if they follow through on promised reforms to the way they assess risks and incorporate climate considerations into their loan structures.

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“Eight months ago, there was still a discussion on the World Bank Board of Directors about whether climate investments were a trade-off for economic development,” said a senior US Treasury official who attended the summit, speaking on condition of anonymity. With Treasury protocol.

The official said that nearly $50 billion in financing that could be earmarked for concessional financing from the United States through multilateral development banks awaits congressional approval. President Biden has said he wants Congress to appropriate more than $11 billion for climate aid, but he managed to get only $1 billion in the last budget.

The official and others with experience working at those lending institutions pointed to the recent change in leadership of the World Bank as a potential factor to accelerate internal reforms geared toward unlocking hundreds of billions of dollars in climate-positive investment in the world’s least developed countries.

“The reason MDBs are created is to counter these kind of risks, global ones,” said Andrew Steer, who worked for years in the World Bank’s risk department and now heads the Bezos Earth Fund, a philanthropic foundation founded by Jeff Bezos. .

Instead, it has become more cautious about protecting its credit ratings. Mr Steer said that trend was finally beginning to reverse. “The special sauce is the momentum – building a sense that things the banks thought were not as risky as they thought,” he said. “And as this summit shows, we are gathering our pace.”