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The East African : Sep 29th 2014
36 The EastAfrican OUTLOOK SEPTEMBER 27 - OCTOBER 3, 2014 D E VE LO PME N T Donors not giving enough funds to fight climate change Poo≥e≥ count≥ies a≥e dive≥ting ≥esou≥ces to climate change, ≥eve≥sing antipove≥ty gains By ALLAN OLINGO The EastAfrican S tingy climate change spending by donors is forcing poor sub-Saharan countries to revert to their national budgets. According to a new report by the Overseas Development Unit (ODI), between 2008 and 2011, Ethiopia committed 14 per cent of its national budget to climate change, or nearly half of the national spending on primary education, while Tanzania spent five per cent, which is almost two-thirds of its health spending, between 2009 and 2012. The report shows that in Ethiopia, climate spending amounts to only six per cent of estimated need, Uganda 10 per cent, while for Tanzania, where more official development aid goes through the budget, it accounts for 59 per cent. At the 2009 UN climate summit in Copenhagen, most developed nations promised to channel up to $30 billion in “fast start” climate finance to vulnerable countries between 2010 and 2012, rising to an annual $100 billion by 2020. Kenya and other East African nations are in line to receive a share of that aid but this seems not to have pulled through. ODI executive director Kevin Watkins said that climate change has a huge impact on poor countries, threatening the lives of hundreds of millions of people, what with increasingly unpredictable rainfall, severe droughts and rising sea levels. “While richer countries in- vest heavily in flood-defence systems, coastal protection and other projects, poorer countries in sub Saharan Africa are struggling with these challenges, hence diverting the scarce resources, potentially reversing the progress made in tackling poverty,” Mr Watkins said To show the inconsistence, between 2008 and 2011, international climate funds contributed $130 million a Small Islands Hawaii Africa Central & South America On physical systems – OBSERVED Signy Island MAJOR IMPACTS OF CLIMATE CHANGE: Glaciers, ice and snow Rivers, lakes, floods and drought Coastal erosion and sea level effects year to sub-Saharan Africa to adapt to climate change, a fraction of the $1.1 billion that the United Kingdom alone spent on its domestic flood defences in 2008. According to the report, Ethiopia allocates an average of $440 million a year to climate action with international funding contributing $88 million. Tanzania, on the other hand, spent $383 million annually on climate change related activities. It receives $237 million per year from donor aid against an additional funding of $500 million per year needed to address current climate risks. Uganda’s draft climate change policy is supported by an implementation strategy that costs $258 million per year compared with current HOW THEY FARE Between 2008 and 2011, international climate funds contributed $130 million a year to sub-Saharan Africa to adapt to climate change. Ethiopia allocates an average of $440 million a year to climate action with international funding contributing $88 million. Tanzania spent $383 million annually on climate change related activities. It receives $237 million per year from donors against an additional funding of $500 million per year needed to address current climate risks. Uganda’s draft climate change policy requires $258 million per year; current public spending is $25 million per year. Kenya’s average annual spending is $130 million. On biological systems – Terrestrial ecosystems Wildfires Marine ecosystems Source: IPCC – Climate Change 2014: Impacts, Adaptation, and Vulnerability public spending in the region of $25 million per year. “Over the four years, both Ethiopia and Tanzania committed $1.5 billion. For countries with such large human development deficits these expenditures come with significant opportunity costs. Spending on climate change runs the risk of crowding out urgently needed spending in other priority areas,” Mr Watkins said. Kenya has an average an- nual spending of $130 million funded through the national budget, to fund climate change activities. It is also estimated that the annual cost of climatic shocks to Kenya alone is $494 billion — about 2 per cent of its GDP. Kenya is also poised to become the biggest aid earner in the region On human and managed systems – Food production Livelihoods, health and economics Regional-scale impacts © GRAPHIC NEWS after it was allocated $2.227 billion by the United Nations Framework Convention on Climate Change (UNFCCC). In April, the British Min- ister of State at the Department of Energy and Climate Change Gregory Baker announced a $57 million spending on Kenya from the UK’s International Climate Fund. While there is no correct funding mix between government and donors, the international commitment under the UNFCCC is that vulnerable countries should receive new and additional resources to assist national efforts. “International funds have been skewed towards helping mainly middle-income countries cut their carbon emissions, rather than helping the poorest countries adapt to the impacts of climate change,” Neil Bird, one of the researchers said. In addition, climate-related disasters are driving growth in preventative infrastructure spend and in post disaster recovery. This is where a bulk of these East Africa’s government spending goes to with investments in water resources, renewable energy and clean technologies topping the spending charts. Recently, the Africa De- velopment Bank established a new fund to battle climate change in the continent. XCF will enhance African countries’ climate adaptation investments. Picture: File Mauritius Antarctic Australasia Asia If the world fails to cut pollution of heat-trapping gases, the already noticeable harms of global warming could spiral “out of control,” a major report by the United Nations has warned North America Europe Arctic Bering Strait Af≥ican leade≥s launch climate catast≥ophe bonds BY CHRISTABEL LIGAMI Special Correspondent IN A bid to curb global warming and climate change, African leaders have launched the African Risk Capacity Extreme Climate Facility for climate change catastrophe bonds. The bonds — planned to be issued in 2016 — will provide additional financing to participating countries to enhance their climate adaptation investments. The facility (XCF) will be entirely objective and datadriven, using Africa’s 30year climatology as a baseline. The index will track increases in the frequency and magnitude of extreme weather events over and above an established baseline in each climate region of the continent. Should the index exceed a pre-defined threshold, bond maturity payments will be automatically made to countries in the affected regions and used to boost adaptation efforts. Consistent meteorologi- cal information covering the entire continent is available since the start of the satellite era in the early 1980s and will be used to calculate a multi-hazard extreme climate index for each region in Africa. Experts estimate that Africa needs to invest between $10 billion — $20 billion annually through 2050 to prepare for a 2°C-warmer world. “The XCF will offer Afri- can nations a new financing mechanism to manage climate risks by providing direct access to new private capital and by leveraging development partner contributions. We are leading the way in innovative climate finance,” said Ngozi OkonjoIweala, the chair of African Risk Capacity governing board. Following the announce- ment, ARC will work with African states and their partners towards an effective and fair XCF design when nations convene in Paris next year for the UN Climate Change Conference. Designed to access private capital and diversify the available funding sources, the XCF will be structured as a catastrophe bond programme, whereby its financial obligations to countries over a three- to five-year financing window will be securitised, issued as cat bonds and financed by capital provided from private investors. Initial catastrophe bonds will total several hundreds of million dollars in value therefore setting the foundation for the issuance of more than $1 billion of African climate change bonds over a period of 30 years. At bond maturity, if the XCF index does not trigger payments during a financing window then the capital provided would be returned to investors in addition to the yield collected through the annual coupon payments. “XCF will ensure that African countries and the international community appropriately monitor climate shocks and will be financially prepared to implement specific adaptation measures in an effective and accountable manner, leveraging ARC’s existing public-private infrastructure,” said Richard Wilcox, founding director general of ARC. “The XCF allows us to leverage private capital against the risk of increased frequency of severe climate events, while using public money to fund immediate and certain adaptation requirements,” said Dr Wilcox.
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