The Stark Reality of Africa's Climate Challenge
Africa finds itself in a profound climate conundrum. Despite its minimal contribution to global warming—just 4% of worldwide greenhouse gas emissions—the continent is on the front lines of climate adversity. Home to 27 of the world's most climate-vulnerable countries, Africa battles with the degradation of two-thirds of its arable lands. This situation highlights a significant imbalance: Africa's minimal role in causing climate change while bearing the brunt contrasts sharply with the meagre 2-3% of global climate finance it receives. This gap underscores an urgent need for enhanced investment and support to bolster the continent's climate resilience and sustainable solutions.
1MTN: Leading the Charge in Nature-Based Solutions
1MTN is a high-quality, nature-based carbon removal project developer in East Africa. However, our mission transcends the development of projects for the voluntary carbon market; it's about restoring degraded lands, preserving biodiversity, and empowering local communities. As a company with longstanding commitment and boots-on-the-ground operations in East Africa, we have firsthand experience with the climate-vulnerable state of land and communities in Africa. We understand the pressing need for more climate finance and the challenges in driving those essential funds. From this perspective, we can consider the voluntary carbon market as a tool attracting private capital to address climate change and foster sustainable development across the continent.
Unlocking Billions at COP28
The conversation around climate finance flows and bridging this investment gap were central to our discussions and a general essential thread for COP28. During Finance Day, 1MTN hosted a panel discussion titled "Unlocking Billions: Private Capital's Role and Opportunities in Africa's Climate Resilience" at the Estonian Pavilion. The panel welcomed participants with complementary competencies and extensive experience in Africa and the climate finance space to explore the immense potential and necessary actions to unlock billions for Africa's future.
Diverse Experience and Expertise for a Common Purpose
The panel featured Nassima Sadar-Gravier, an Obama Leader and CEO of AfroClimate, a non-profit organization dedicated to addressing climate change and the essential needs of low-income African communities; Smita Sanghrajka, an Engagement Partner at the Mastercard Foundation Fund for Resilience and Prosperity and Partner at KPMG International Development Advisory Services in East Africa; and Sheri Hickok, CEO of Climate Impact Partners, a pioneering carbon finance organization with a remarkable 25-year track record in the voluntary carbon market and extensive experience in Africa. These leaders brought their unique insights, offering a compelling and comprehensive view into the opportunities and challenges in unlocking private capital for Africa's climate resilience.
Key Takeaways: A Multi-faceted Approach
Our discussion illuminated several critical points:
The necessity for a diverse set of financial solutions, including equity, debt, green/ blue bonds, grants, and carbon credits, to address the climate crisis.
A re-evaluation of CSR investments and the approach to investing in Africa, emphasizing the inseparability of nature and people and the need for a broader perspective on timelines and geographical aspects.
It is crucial to adopt a holistic approach to financing. For instance, relying solely on grants is not a viable solution. Once the grant money runs out, what happens next? Taking a broader perspective ensures long-term success and addresses potential challenges.
The role of blended finance, coupled with technical assistance and capacity building, in creating a pipeline of bankable projects, thereby reducing investment risks and fostering a thriving local entrepreneurial ecosystem.
Nature-based projects, whether through removal or avoidance, hold critical importance. However, to truly comprehend and assess their impact, one must delve into the details and not be swayed by simplistic analogies like "my phone broke, so all phones are bad." What truly matters is the execution. Ultimately, the execution determines the impact, which is felt within communities. Let us seek out those impactful projects that bring positive change.
Looking Forward: The East Africa Carbon Markets Forum 2024
Inspired by the rich dialogue at COP28, 1MTN is advancing the conversation through the East Africa Carbon Markets Forum 2024, which is set to take place in Kampala, Uganda, on May 9th and 10th. The event will focus on carbon market regulations and the crucial theme of unlocking climate financing in East Africa, aiming to create a dynamic platform for knowledge exchange, collaboration, and action(able discussions) to advance sustainable development goals.
Conclusion: Building Climate Resilience is a Global Responsibility
Africa's climate challenge is a global responsibility. By unlocking private capital and embracing innovative financing mechanisms, we can empower Africa to build climate resilience, ensuring a sustainable future for the continent and the world.
To quote Sheri Hickok's poignant message to all climate space investors, “You need to lean in and decide where you want to put your money because this is about impacting lives on the ground, and this is about communities that we are trying to serve. I think we sometimes need to go back to [the problem] what are we solving for.....So what's holding you back?”