What’s up in Cancun and what’s the deal for Africa?

From 29^th November to 10^th December, the 16^th Conference of Parties (COP16) to the U.N. Framework Convention on Climate Change (UNFCC) convenes in Cancún, Mexico to follow up on last year's summit in Copenhagen, where word leaders failed to negotiate an international, legally-binding treaty to curb harmful emissions of greenhouse gases.

There are low expectations for successful negotiations in Cancun. This is because people have lost faith in not only the ability for a political agreement and consensus to be made, but also in the process. And on Tuesday (30 November 2010), UNEP released a report that concluded those reductions committed to in the Copenhagen Accord, even if fully met, are only 60 percent of the reductions needed to stop prevent global temperatures from rising by more than two degrees Celsius above preindustrial levels – the point considered to be the threshold for catastrophic climate change which will expose millions to drought, hunger and flooding.

So even if an agreement is made at the end of Cancun, the commitments within it will prevent some of the worse case climate change scenarios playing out, especially since from day one of the negotiations, Japan stated that it explicitly will not have anything to do with a post 2012 Kyoto Agreement.

So where does this leave Africa? Ironically, the lack of trust in attaining a political agreement has shifted discussions to issues more relevant to Africa, specifically on finance, forestry, technology transfer and adaptation in general.

Scientists agree that the best starting point for adaptation is to be rich, though it is not foolproof: not even the rich can buy off all hazards. But wealth buys information and it opens up options. Resources help people adapt both before the fact, by reducing risks, and after it, by aiding recovery from harm. Wealth can create hedges against the effects of climate change. It is wealth that Africa, compared to the rest of the world is short of.

Fortunately, a key pillar of the Cancun negotiations is the establishment of a Green Climate Fund, which was agreed upon in Copenhagen – disbursing $30 billion in 2010 to 2012, and then $100 billion each year after that until 2020. Multilateral funds have been established before so it’s not as if the Green Climate Fund is charting new territory. However, the political sensitivities and the criteria countries will have to meet to access these funds are looking onerous.

If African countries want a piece of this pie, they will have to focus seriously on governance, transparency, monitoring and valuating their carbon emissions and sinks - a tough job for any country. It would seem that many African countries will need funding to build this capacity in the first place. All of this is feasible, but African countries need to now use these conferences and meetings to gather information, exchange knowledge, learn and build their expertise from the participants and get everything in place so that they are an attractive destination for new climate and development specific funds.

For more information on climate finance and to check out the flows and channels, visit the new platform created by the World Bank and UNDP to track climate-change related finance by region, focus area, sector or financing mechanism: http://www.climatefinanceoptions.org/cfo/index.php. And to be ahead of the games for the climate change negotiations in Durban, South Africa, the official COP17 website was just launched: http://www.cop17durban.com/Pages/default.aspx

Climate finance after Copenhagen

Calculating the real cost of climate is a highly complex and contentious affair. It is undeniable that we need to fundamentally transform our economies to get on the path of low-carbon growth, especially by reducing energy consumption and reliance on fossil fuel and halt deforestation as one of the biggest single contributors to climate change. We also need to adapt our way of life to the unavoidable effects of climate change such as changing rainfall patterns, extreme weather events and rising sea levels. While it remains difficult to calculate the costs of the required action on such a massive scale, there is a clear urgency to make substantial funds available as soon as possible.

A variety of climate funds have already been established, most of which have a very specific purpose and relatively limited funding from donor countries. A proposal for a new approach in raising up to $100 billion a year for “Green Fund” for the transition to a low-carbon economy by the World Future Council has been taken up by the IMF. The principal idea is to raise finance through the issuance of additional Special Drawing Rights (SDRs), a reserve asset created by the IMF. The creation of “new money” by issuing new SDRs should not cause inflation if the funds are productively invested into renewable energy.

Africa has long been demanding significantly increased climate funding as the continent most affected by and least responsible for climate change. The official Proposal by the African Group in Copenhagen demanded the establishment of a new adaptation fund to finance the full costs of adaptation activities and the related transfer of technology sharing and capacity building in developing countries, with sources of funding be new, substantial and sustained public funding from developed countries, with an annual scale not less than 2.5 % of the GNP of developed countries. The hopes for such significant funding were shattered together with many other aspirations for the Copenhagen conference but at least some commitment was made in the Copenhagen Accord with regard to climate finance:

“Scaled up, new and additional, predictable and adequate funding as well as improved access shall be provided to developing countries, in accordance with the relevant provisions of the Convention, to enable and support enhanced action on mitigation, including substantial finance to reduce emissions from deforestation and forest degradation (REDD-plus), adaptation, technology development and transfer and capacity-building, for enhanced implementation of the Convention. The collective commitment by developed countries is to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010-2012 with balanced allocation between adaptation and mitigation. Funding for adaptation will be prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa. In the context of meaningful mitigation actions and transparency on implementation, developed countries commit to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries. This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries. A significant portion of such funding should flow through the Copenhagen Green Climate Fund.

To this end, a High Level Panel will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, towards meeting this goal.”

While the Ethiopian Prime Minister Meles Zenawi was criticised by many for his willingness to compromise and settle for less adaptation funding than requested, the fact that there now is such as fund can partly be attributed the to Joint appeal of France and Ethiopia from 15 December. Meles is now a member of the high-level panel for the Green Climate Fund which has a formidable task ahead in addressing the following key issues:

1. Out of the USD 10 billion committed, how much is new and additional money, i.e., not a diversion of Official Development Assistance (ODA) or previously committed funding to deforestation by countries such as Norway or low-carbon growth by countries such as the UK? And if it is not “new money”, how should additional commitments be measure without penalising countries for their commitments earlier on?

2. What will be the mix of public and private, bilateral and multilateral, including alternative sources of finance for the fund and will the funds be dispersed as grants or loans?

3. Which financial institution will allow fulfilling the long-standing demand by developing countries to have balanced representation in the administration of the fund in addition to figures such as Meles already taking prominent positions?

4. What will the money be spent on? Just deforestation and forest degradation, adaptation, technology development and transfer and capacity-building as outlined in the accord or other measures such as finalizing national low-carbon growth and adaptation plans, improving in-country capacity to design and implementing national climate change actions as proposed by the UK, Mexico, Norway and Australia?

5. And last but not least, how will Africa build its capacity to be able to absorb and us additional climate funding after 2012, especially if it comes anywhere near the USD 67 billion for adaptation and USD 200 billion for mitigation as requested in the run-up to Copenhagen?

Despite all the shortcomings of Copenhagen, the rather timid initial financial commitments together with the prospect of something more substantial might provide a good opportunity to address these questions and make climate finance work for Africa

Things you might not know about Africa

The africapractice team had emails flying round in response to the question: What do people not know about Africa?

There are plenty of preconceptions and misconceptions about the continent, but here are a few of the facts and figures that came up last week:

• Seven countries in Africa account for more than fifty per cent of the population (Nigeria, Ethiopia, DRC, SA, Tanzania, Kenya, Sudan)
• Africa holds about 10% of the world's proven oil reserves
• There are up to 100 million members of the African Diaspora
• The longest cable car in the world is in Nigeria
• South Africa sold $1.8 billion worth of cars to the US last year, putting us ahead of Sweden and Italy as suppliers to the US market
• Africa is most affected by climate change but only produces 3% of global emissions
• Approximately half the population of Africa is under the age of 18
• Kenya is one of only five countries in the world that generates more than 15% of their electricity from geothermal sources
• Africa is the fastest growing telecoms market in the world
• Nigeria has a population the sum of the thirty one smallest countries in Africa
• Only 4% of Africa's hydropower potential is utilised currently
• Rwanda is ranked first by the Inter-Parliamentary Union in terms of the percentage of female politicians in its lower chamber, with 56.3 percent.
• The largest cement plant in the world is being built in Nigeria
• South Africa is the first, and to date only, country to build nuclear weapons and then voluntarily dismantle its entire nuclear weapons programme
• Almost 50% of all African immigrants in the United States hold a college diploma
• In the mid 1990s, there were more phones in New York City than the whole of Africa. But if the growth curve in mobile devices in Africa continues, it is likely to surpass the United States in number of mobile consumers
• The city of Pretoria, in South Africa, has the second largest number of embassies in the world after Washington, D.C.

A list of facts won't change people's image of Africa in one go, but it's all part of a far richer picture then a lot of people realise exists.

WEF: Investment Climate and Climate Change

The World Economic Forum in Cape Town last week brought together the public, private and non-governmental sector, as well as media and commentators on Africa.

A quick summary of some of the sessions I attended...

Investment Climate: A Better Way of Doing Business

• Jeremy Ord: Executive chairman, Dimension Data: Need the right infrastructure for business – including telecommunications, otherwise foreign investors will stay away.
• Raila Odinga, Prime Minister of Kenya: Have to knock down the hurdles to doing business, such as lengthy legal and operational processes - but this has to be permanent, not temporary measures.
• Cecilia Ibru, CEO, Oceanic Bank International: Banks need to re-establish trust with consumers and business customers.
• Omari Issa, CEO, Investment Climate Facility: African media needs to be part of changing the perception of Africa as a good place for business, as investors still often look to international media for info – needs to come from the inside.
  
  
  Addressing Climate Change: An African Imperative
• Buyelwa Patience Sonjica, Minister Water & Environment, SA: We need to demystify climate change, so everyone understands the meaning, the impact.
• Ulla Tornaes, Minister of Development Cooperation, Denmark: Climate change is a global issue that needs global solutions involving all stakeholders – public, private sector and civil society.
• Marcus Aguis, Chariman, Barclays, UK: Investors are looking for future business opportunities that make sense, ways to diversify our income – that will include emissions trading. The capital will be there for investments that address climate change.
• Robert Godsell, Non-executive chairman, Eskom Holdings: Not a question of development or climate change mitigation – has to be both. Should always be development. Business people are always more optimistic than scientists and academics. The two powerful forces for future solution will be technology and market forces.
• Tom Boardman, CEO, Nedbank: We can’t underestimate the scale of this issue. We can’t treat the parts – needs a big solution. Technology is important, but takes a while to come on stream, so before we can adapt we need to mitigate. Preserving rainforests is one of the best returns on investment we can make. Already 200 mn people in African under ‘water stress’, with or without climate change. We can’t afford to lose another decade.