By 
By Bahle Gama
Africa’s share of the total global climate change amounts to 55.3 per cent. At the current finance levels of around US$30 billion per year, Africa will only mobilise US$195 billion by 2035.
According to Africa’s NDCs and the Global Center on Adaptation (GCA), the continent requires US$52.7 billion a year for adaptation.
However, this is likely to be a significant underestimation as only 28 which is half of the NDCs calculate costs for adaptation, according to the GCA.
Indeed, further analysis of the NDCs from both Brookings in 2024 and CPI in 2022 agree that the adaptation finance needs for the continent per year are between US$53-57 billion,” reported the MO Ibrahim Foundation Financing Africa forum report.
However, both Brookings and CPI point out that these figures, which are based on Africa’s NDCs, are highly likely to be significantly underestimated due to a lack of data and technical expertise to calculate true adaptation needs.
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Brookings argues that the annual cost for adaptation needs could be 100 per cent higher, meaning the cost could be as high as US$106 billion per year, based on their initial figure of US$53 billion.
Further, at the current finance levels of around US$30 billion per year, Africa will only mobilise US$195 billion by 2035. With yearly adaptation finance estimates potentially as high as US$106 billion, this amount would not even cover two years of adaptation costs at the upper estimation.
However, the Institute for Global Environmental Strategies (IGES) in 2023 estimates an even larger figure based on NDCs that uniquely set aside Africa’s substantial needs versus other world regions.
According to IGES, Africa’s total climate needs would amount to US$3.5 trillion, of which US$2.1 trillion would be for mitigation, US$986.6 billion for adaptation, and US$364.7 billion estimated as unspecified needs.
“Africa’s share of the total global climate needs amounts to 55.3 per cent. Of this, Africa accounts for 71 per cent of adaptation needs and 69.3 per cent for mitigation.
This surprisingly large share of mitigation needs for Africa is in part due to the absence of mitigation finance figures from major emitters in their respective NDCs,” states the report.
Recent development experience suggests that economic take-off requires countries to reach and sustain an investment rate of 30 percent of GDP for two decades or more.
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Africa’s investment and national savings rates are at 22 percent and 20 percent respectively. The 30 percent investment threshold vis-a-vis the 20 percent saving rate translates to a financing gap of 10 percent of GDP, which, applied to Africa’s US$3 trillion GDP works out to a baseline investment requirement of US$300 billion a year.
US$250 billion to US$300 billion a year, another 8 to 10 percent of GDP.
“The two investment requirements are not additive, there is bound to be a fair amount of overlap, in energy for example. Still, these broad-brush parameters indicate a financing gap in the order of 15 percent of GDP, US$450 billion per year,” stated the report.
From a global capital availability standpoint, this is reportedly not a large amount of money. It is about 0.4 percent of the US$120 trillion assets under management (AUM) in the hands of global institutional investors.
Also, on a GDP proportionate share, a sum of US$3.2 trillion, is equivalent to seven years of the baseline investment requirement. Since debuting in the sovereign bond markets in 2007, African countries have issued over US$160 billion in sovereign bonds.
Three countries Cote d’Ivoire, Kenya, and Benin raised US$4.85 billion in arguably the most difficult market conditions since Africa’s market entry into the bond markets.
