Sunday, October 25, 2020

Africa establishes its own Climate Change Fund

The Botswana government, environmental NGOs as well as research institutions stand to benefit from the African Climate Change Fund (ACCF) which has been set up by the African Development Bank. To reduce transaction costs, the minimum amount for a proposal to be submitted to the ACCF will be US$250 000. The technical committee will approve requests for grants of less than the equivalent of $500,000. Requests for funding of $500,000 and above, but less than $1 million shall be cleared by the technical committee and approved by the donor.

An activity equal to or exceeding $1 million will be submitted for clearance by the technical and the donor, followed by approval by the Board of Directors. Ineligible expenditures under the ACCF include: salaries for civil servants and employees of NGOs in recipient countries hired as consultants or otherwise; the purchase of vehicles, land, land rights and real estate. The eligibility of NGOs and research institutions will depend on their credibility and track record in the area of financial governance, among other criteria. Such organisations shall be based in Africa; provide evidence of valid legal registration under the laws of the regional member countries (RMCs) in which they operate. The ACCF is created in response to the AfDB’s commitment to mobilise additional climate finance for Africa, and support African countries in becoming more resilient to climate change and in transitioning to green and low carbon growth.

The ACCF represents a first step in honouring the bank’s commitment to African countries and the Africa Union to channel more climate finance to the continent. Conceived as a bilateral trust fund (with an initial untied contribution of $6.1 million from Germany), ACCF’s objective is to scale-up to a multi-donor trust fund as soon as at least one new donor is ready to join. ACCF will become another channel for funding, which will complement the bank’s own resources as well as the multilateral funds for which the Bank is an implementing agency. Complementing existing bank trust funds, its scope will be sufficiently broad to cover various types of activities related to climate resilient and low carbon growth. A combination of geographic and economic factors, as well as a dependence on basic natural resources make Africa the most vulnerable continent to the impacts of climate change. The negative impacts of climate change are estimated to reduce Africa’s GDP by about 3 percent annually.

According to the United Nations, Africa already needs between $7 billion and $15 billion per year by 2020 to meet its adaptation challenges. The UN cautions that, even if the world does manage to get on track to keep warming below 2┬░C, Africa’s adaptation costs will still hover around $35 billion per year by the 2040s and $200 billion per year by the 2070s. Despite the challenges it faces, Africa gets a small share of climate finance as compared to other continents.

“This is mainly due to the region’s lack of readiness and capacity to access international climate finance, the cumbersome procedures of some funds, as well as the limited capacity of African countries to negotiate international climate deals that could benefit the continent. The fact that Africa benefited very little from the Clean Development Mechanism (CDM) demonstrates the need for the continent to get ready for climate finance and scale it up for the benefit of sustainable development,” the bank says.

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