Sh7.5tn climate change fund big lift for Africa

Developing countries’ efforts to mitigate against the effects of climate change are set to get a massive lift with the proposed establishment of Sh7.5 trillion green fund by the International Monetary Fund.

The success of this kitty will come as a relief for developing countries, which despite being at the center of the climate change storm are too cash-strapped to come up with effective strategies.

According to the managing director of the IMF, Dominique Strauss-Khan, the green fund would need a major political effort, but the resulting pay-off would be enormous for Africa and the world.

“Africa is already paying the price of climate change. Without action, Africa will suffer more from drought, flooding, food shortages and disease, possibly provoking further instability and conflict. We must take urgent action,” said Mr Strauss-Khan at a conference in Nairobi last Monday.

When initial plans for the mitigation fund were announced in late January, there were concerns raised that IMF was groping beyond its traditional spheres. However, the IMF head used his African visit during the week to make his pitch.

Finer details unclear

“Climate change has a lot of macro-economic consequences, including consequences on social security, as a threat to democracy and sometimes to peace,” he said. While African countries have contributed marginally to the depletion of the environment over the years, the effects have been hard on them. This has therefore created the need for large-scale and long-term investments for adaptation and mitigation.

While the finer details of the green fund are still being worked out by the IMF, Mr Strauss-Khan indicated that IMF will not manage the fund in its totality. The fund is expected to create a mechanism to play as a link to the current carbon-based financing in the medium term.

A working document is to be released in two weeks’ time by the IMF. It will then be sent for discussion by a high-level climate advisory panel set up by United Nations (UN) Secretary General, Ban Ki-Moon.

“Ultimately, these will have to come as budgetary transfers from developed countries, drawing on scaled-up carbon taxes and expanded carbon trading mechanisms. But these new revenue sources will take time to put in place. So we need an interim solution,” said Mr Strauss-Kahn.

According to him, climate change was a hefty agenda for Africa and the continent must take up leadership on the issue. “It is a two way process that will require that the leadership takes charge of it and embraces good governance as a practice,” he said.

Failure to reach a consensus at the UN climate talks in Copenhagen last December left most African countries aggrieved. They saw this as an attempt by developed countries to shift focus from the real issues. As a result a number of the countries have now come up with their own solutions to mitigate the effects.

“To us Copenhagen was a disappointment and as a government we have come up with a comprehensive plan to mitigate on these issues by 2017. We do not want to sit and wait for the world to come and do it for us,” said Mr Raila Odinga, Kenya’s Prime Minister.

Africa’s economies are also highly dependent on natural resources. Nearly 80 per cent of its energy comes from biomass and a third of its gross domestic product comes from rain-fed agriculture, which supports 70 per cent of the population.

Although Africa’s greenhouse gas emissions have been modest because of its low levels of industrial output, the continent suffers disproportionately from climate change. It is for this reason that several schools of thought have argued that African countries are have right to demand that international climate negotiations be based on principles of historical justice