中文
By Bereket Sisay
The Summit for a New Global Financing Pact, held in Paris on June 22-23, with the aim of building a new contract between the countries of the North and the South to address climate change, has concluded, among others, with the IMF and the World Bank decided to strengthen crisis financing as the effect climate change rocking the planet in an unprecedented way.
It was mentioned that the World Bank will facilitate financing for developing countries affected by climate-related natural disasters, while the IMF said it had succeeded in delivering the $100 billion in Special Drawing Rights available for vulnerable nations.
However, in light of previous funding from multilateral institutions, it is reasonable to ask whether the new financial commitments, unspecified and yet-to-be-delivered funds, are sufficient to invest specifically in climate adaptation in developing countries. This inquiry is in line with the fact that the disbursement of climate finance to date has been fragmented and has fallen short of expectations.
In 2022, for example, the World Bank provided a record $31.7 billion to help countries address climate change, but this was criticized as low and insufficient given the magnitude of the financial need. This criticism is more in line with the United Nations 2022 Adaptation Gap Report, which shows that international adaptation finance flows to developing countries are 5-10 times lower than estimated needs, and the gap is widening, with estimated annual adaptation needs of $160-340 billion by 2030 and $315-565 billion by 2050.
In particular, Africa's access to climate finance remains very low, with a focus on small, fragmented and uncoordinated operations, mostly concentrated in middle-income countries, according to the African Development Bank's latest report.
In addition, financial pledges are not delivered on time; for example, the $100 billion pledged by developed countries has not yet been delivered. This inevitably makes climate finance unsustainable and unpredictable, while climate change is growing at an alarming rate, while its compounding problems are constantly increasing and becoming more complicated.
This has negatively influenced developing countries' attempts to increase their climate adaptation investments to mitigate and combat global warming. Many developing countries lag far behind in implementing environmental protection measures, including water and land conservation, reforestation, and the expansion of efficient renewable energy sources and other green projects that have the potential to reduce climate impacts.
This collective dysfunction has contributed to the weakening of global efforts to combat climate change. This is because mitigation, adaptation, climate technology, and other equally competing activities are capital-intensive and require a viable fund to pursue the project.
Therefore, multilateral financial institutions are failing to fulfill their role as an important instrument to address the budget gap, leading developing countries to push for reform of the institution, as it is asymmetrical to the current financial demand for various adaptation projects.
Despite consistent calls for the restructuring of these institutions, nothing has yet been done to address the current and future challenges of climate change. Due to the current status of the international financial institutions, which are neither able to provide sufficient financial resources nor willing to be reformed, an alternative was also proposed during the just concluded Paris Summit. This is a huge blow to the long-serving institutions of the Breton Woods, as it implies that structural problems are still entrenched and seeking solutions.
All these factors ensure that global climate finance is indeed in crisis, and this certainly puts the world, especially developing countries, at risk and more vulnerable to a vicious cycle of disruption unless a pragmatic shift is made to change course. In this regard, the entire process of climate finance needs to be evaluated and replaced by a new model of monetary instruments that can correct the flaws.
Accordingly, there is a need to upturn climate finance support for developing countries, especially in Africa. Africa is severely affected by climate change, while the continent does not contribute significantly to global warming as its carbon footprint remains low compared to other parts of the world.
The African Development Bank estimates that Africa will lose a staggering $7 billion to $15 billion every year from 2020 due to the devastating effects of climate change. This could rise to around $50 billion per year by 2030, or up to 7 percent of Africa's GDP on average.
In addition, the continent is currently experiencing a compounding problem of supply-side economic shock as a result of the ongoing Ukraine-Russia conflict, the impact of the COVID-19 pandemic, and the prevalence of multiple socio-economic crises. Therefore, it is the responsibility of these financial institutions as well as international actors to financially encourage developing countries, including those in Africa, to take action to fight the impending climate-induced catastrophe, as the problems require a holistic and coordinated response.
Bereket Sisay, a special commentator on current affairs for CGTN, writes on international affairs with a special focus on Africa.
