CLIMATE CAPITAL

African Nations Deserve Climate Funding, Not Debt, Says Economist

The United Nations Development Programme estimates Africa needs about US$2.8 trillion by 2030 for climate mitigation, despite contributing only 4% of global greenhouse gas emissions. However, the continent’s urgent need is for adaptation funding, as climate change is already impacting lives. In 2022, only half of the climate finance Africa received—US$4.6 billion—was allocated to adaptation, with the rest directed towards mitigation or a mix, reflecting the global north’s priorities.

Published

3 weeks ago

November 11, 2024

Charles Wachira

Prof. Carlos Lopez urges African countries to use COP29 to address systemic biases that inflate risk perceptions, downplay achievements, and exacerbate borrowing costs and commodity dependence.

: As COP29 kicks off on November 11, African nations face increasing pressure to tackle climate adaptation, but their reliance on loans instead of grants is deepening the debt crisis.
By Prof Carols Lopes

As we approach the global annual climate change conference, COP29, the need for increased public finance from the global north to address climate adaptation in Africa has become more urgent than ever.

However, framing the finance debate solely around this need risks deepening mistrust and downplaying the scale of the challenge. The financial burden of addressing climate change, coupled with limited fiscal space, creates a precarious situation for many African countries. African countries bear no historical responsibility for causing the climate crisis. However, they rely heavily on external financing to solve climate change problems.

Unfortunately, much external climate finance comes from loans rather than grants. This only worsens Africa’s debt burden. There is also not nearly enough money being channelled to Africa to pay for climate change adaptation.

At COP29, African negotiators will undoubtedly focus on reducing dependence on debt, and improving access to finance. I’m an economist who specialises in climate change and governance, with a long background at the United Nations and the African Union. Without robust commitments from public financial institutions, Africa will continue to face the dual crises of climate vulnerability and debt.

African countries must use COP29 to tackle systemic biases that inflate risk perceptions, minimise African achievements and inflate its problems. These biases drive up borrowing costs, and worsen commodity dependence.

THE CLIMATE FINANCE GAP

The African Development Bank has estimated that Africa needs between US$1.3 trillion and US$1.6 trillion in total climate financing every year between 2020 and 2030. This will enable African countries to meet their commitments to reduce greenhouse gas emissions, known as nationally determined contributions.

The Global Center for Adaptation estimates that Africa requires at least US$52.7 billion annually for adaptation every year until 2035. However, this figure could rise to US$106 billion. This is because data gaps allow for double counting of financial contributions. There is also very little transparency about the real amounts of climate finance being disbursed. Because nationally determined contributions are focused on mitigation, carbon depletion tends to be measured without accurate calculations of the amount of emissions that are captured, or carbon that is conserved.

The United Nations Development Programme says that Africa’s nationally determined contributions mean the continent needs about US$2.8 trillion by 2030 for climate mitigation. However, Africa contributes only 4% of all greenhouse gas emissions currently. It needs funds for adaptation to adjust to climate change that is already changing the lives of many, rather than for mitigation.

But only about half of the climate finance received by Africa in 2022 was for adaptation (US$4.6 billion). The rest of the climate finance addressed mitigation or a mix of both, in line with the global north’s agenda.

Worse still, 64.5% of adaptation financing came from loans, which need to be repaid. This will increase the financial strain on African nations.

LOANS VERSUS GRANTS FOR CLIMATE CHANGE ADAPTION

Multilateral financial institutions such as the International Monetary Fund (IMF) and the World Bank, and the Organisation for Economic Co-operation and Development through their Development Assistance Committee, handed out US$8.33 billion to Africa in 2022 for climate action. But most of this – US$5.4 billion – was loans. Only US$2.9 billion was grants, with a small fraction in equity investments.

These loans come with lower-than-market rates or extended repayment terms. But they still add to Africa’s external debt, which reached US$1.12 trillion in 2022. African countries’ debt repayments are twice what they get as climate finance.

The United Nations Framework Convention on Climate Change says developed countries are responsible for financing climate adaptation in vulnerable regions. But loans that create a huge debt burden only enrich global financial institutions at the expense of African countries.

The effects of climate change are causing unprecedented floods, drought and other disasters across Africa. Yet it is becoming more difficult for African countries to access the climate finance they need to adapt to a warming world.

Why is the situation worsening?

First, access to climate finance remains a bureaucratic nightmare with complex application processes. There also needs to be more transparency in fund allocation. The recently established Loss and Damage Fund could assist. It is meant to channel money to countries worst affected by climate change to pay for the damage caused.

Second, the focus on reforming Bretton Woods institutions and development finance institutions is shifting attention away from the obligations developed countries have signed up for. This distracts developing nations from making reforms in trade, taxation and financial regulations that could drive more meaningful results.

Third, there is a lack of liquidity (access to fresh money) needed to propel investment or allow countries to bridge their budget deficits. African countries are forced to juggle paying for healthcare, education and infrastructure development with paying back debt. Some spend more on debt repayments than healthcare.

Increased tax efficiency and domestic savings, such as the savings maintained by pension funds, could be used. This should be the priority while the fight for better international conditions continues.

Fourth, the distinction between development finance and climate finance is becoming an impediment to progress. The conversation should move away from getting African countries to prioritise greenhouse gas emission reductions at the expense of other development priorities. Climate action is under-implemented and underfunded. The focus must be on excessive dependency on aid and rather promote market incentives to encourage the private sector to invest in climate adaptation in Africa.

Startups & Funding

Top 10 Richest East Africans Under 30: Industries & Net Worth

Published

13 hours ago

December 2, 2024

Charles Wachira

: Discover the top 10 wealthiest East Africans under 30, their industries,
achievements, and estimated net worths. Learn about their remarkable journeys
to success.”

Kenneth M. Njeru (25, Kenya)

○ Engagement: Founder of Africa Afya Healthcare, focusing on healthcare investment services and IT solutions for healthcare access improvement.
○ Industry: Healthtech and healthcare investment.
○ Net Worth: Not publicly disclosed but prominent in healthcare financing in Kenya

Ayushi Chandaria (26, Kenya)

○ Engagement: Founder of Design Thinking Program, fostering innovation in education.
○ Industry: Education and innovation.
○ Net Worth: Not publicly disclosed but recognized for her impactful work in Kenya

Alex Mativo (29, Kenya)

○ Engagement: Co-founder of E-LAB, Nanasi, and Duck, leveraging technology in multiple sectors.
○ Industry: Technology and entrepreneurship.
○ Net Worth: Estimated at several million USD due to diversified ventures
.

Prisca Wegesa Magori (29, Tanzania)

○ Engagement: CEO and Co-founder of TenTen Explore and Smart EFD, providing innovative software solutions.
○ Industry: Technology and software development.
○ Net Worth: Undisclosed but influential in Tanzania’s tech scene

Andrew Ddembe (28, Uganda)

○ Engagement: Co-founder and CEO of MobiKlinic, providing mobile-based healthcare solutions.
○ Industry: Healthtech.
○ Net Worth: Not disclosed but a key figure in Uganda’s health innovation

Arooj Sheikh (28, Kenya)

○ Engagement: Founder and CEO of Beyond Kenyan Bars, working on social justice initiatives.
○ Industry: Social entrepreneurship.
○ Net Worth: Undisclosed, focusing on impactful social change
.

Hildah Magaia (29, Tanzania/South Africa)

○ Engagement: Professional footballer for Mazatlán FC and Tanzania’s national team.
○ Industry: Sports.
○ Net Worth: Significant from sports and endorsements

Chad Jones (28, Kenya/South Africa)

● Engagement: Social media influencer and brand ambassador.
● Industry: Digital media and marketing.
● Net Worth: Not disclosed but has significant brand partnerships

These individuals have demonstrated remarkable entrepreneurship and talent across East Africa, contributing to industries like health, technology, education, sports, and tourism.

CLIMATE CAPITAL

Access Bank Secures CAK Approval for National Bank Acquisition

Published

1 month ago

October 30, 2024

Charles Wachira

: Access Bank to acquire National Bank of Kenya for $100M, boosting market
share to 1.9% with CAK approval and workforce retention conditions.

CAK Approves Access Bank’s Acquisition of NBK with Conditions

The Competition Authority of Kenya (CAK) approved Access Bank’s acquisition of the
National Bank of Kenya (NBK) from KCB Group, requiring Access Bank to retain 80% of
NBK’s workforce for at least one year.
The Central Bank of Kenya (CBK) must now give its final approval for the deal.

Employment Retention Key to Approval

According to CAK, Access Bank must maintain 80% of NBK’s 1,384 employees and all
316 staff from its local subsidiary, Access Bank Kenya, for a year following the
transaction’s completion. “The transaction has been approved on condition that Access
Bank Plc retains, for one year, at least 80% of the target’s current workforce,” CAK
stated.

Deal Valuation and Finalization Timeline

While the deal’s value has not been disclosed, KCB Group announced in March 2024
that NBK would be sold for 1.25 times its book value. With NBK’s 2023 book value at
$79.77 million, the acquisition is estimated to be worth approximately $100 million. The
transaction is expected to conclude in November.

Expanding Access Bank’s Kenyan Presence

Access Bank’s current footprint in Kenya includes 23 branches in 12 counties. Acquiring
NBK’s 77 branches across 28 counties will significantly boost its presence and service
offerings, including retail, corporate, and Islamic banking. Access Bank, currently
ranked as a tier 3 lender, will integrate with NBK, a tier 2 institution, enhancing its status
in the market.

The acquisition will give the merged entity a 1.9% market share in Kenya’s banking
sector. “The combined market size is unlikely to raise competition concerns since it is
low,” CAK noted. “The merged entity will face competition from other banks in the
market. Based on this, the transaction is unlikely to substantially lessen or prevent
competition.”

CLIMATE CAPITAL

Patricia Ithau: CEO of WPP-Scangroup, Leading Africa’s Marketing Giant

Published

3 weeks ago

November 14, 2024

Charles Wachira

: She leads WPP-Scangroup PLC, the largest marketing and communication group in sub-Saharan Africa, driving innovation, business growth, and social impact across the region.

Patricia Ithau leads WPP-Scangroup PLC, the largest marketing and communication group in sub-Saharan Africa. She took over as CEO on March 14, 2022, succeeding Bharat Thakrar at the helm of this Nairobi Securities Exchange-listed company.

Under her visionary leadership, WPP-Scangroup continues to redefine the marketing and advertising landscape in East Africa through a multi-agency, multi-disciplinary approach.

Her focus on pushing the boundaries of creativity and innovation has positioned the company to drive growth and deliver groundbreaking solutions across the region.

Early Life and Academic Foundation

Patricia’s leadership journey grew from a strong academic foundation.

Patricia Ithau studied at Loreto Convent Msongari in Nairobi before earning her Bachelor of Commerce degree from the University of Nairobi.

Further expanding her knowledge, she earned an MBA in Strategic Management from the United States International University-Africa.

She also completed advanced management programs at prestigious institutions like Strathmore University, IESE Business School, INSEAD, and Oxford University, laying the foundation for a distinguished career in business leadership.

Career Milestones: L’Oréal Africa and Beyond

Before joining WPP-Scangroup, Patricia was the founding CEO of L’Oréal Africa, where she significantly drove the company’s growth and success in the region.

Under her leadership, L’Oréal’s African subsidiary generated $25 million in annual revenue, employed over 270 people, and produced 40 million units annually.

One of her key achievements was leading one of the first acquisitions of a local business by a multinational in East Africa, demonstrating her ability to drive growth and market penetration in the competitive FMCG sector.

Advocacy for Women in Leadership

Patricia has actively championed women in leadership, advocating for creating opportunities that allow women to thrive in the corporate world.

As an Ambassador for the Women on Boards Network (WOBN) in Kenya, she has worked to elevate women into leadership positions.

She holds board positions at organisations such as ABSA Bank Kenya, Jambojet Ltd, Vivo Fashion Group, and the British Chamber of Commerce.

Furthermore, Patricia actively supports corporate governance and social impact as a Trustee for the Vodafone Foundation (UK) and the M-PESA Foundation.

Overcoming Personal Challenges and Building Resilience

In addition to her professional achievements, Patricia’s journey has been marked by resilience.

She was crowned Miss Kenya in 1986 during her first year at the University of Nairobi.

Navigating societal judgments and stereotypes during this period helped shape her leadership abilities, teaching her invaluable lessons in self-confidence and perseverance.

Recognition and Awards

Patricia’s contributions to Kenya’s economic growth and development have not gone unnoticed.

In 2020, she was awarded the Head of State Commendation (HSC) for her outstanding role in business development.

Patricia is also an accredited executive coach and certified Emotional Intelligence practitioner, emphasising her commitment to fostering future leaders who embrace emotional intelligence and holistic leadership practices.

Patricia’s leadership extends beyond the corporate world.

As East Africa Regional Director for the Stanford Institute for Innovation in Development Economies (SEED), Patricia has driven sustainable business growth and job creation across sub-Saharan Africa.

Through SEED, she has supported over 200 businesses in tackling leadership challenges and fostering innovation, contributing significantly to the region’s economic transformation.

Family and Personal Values

Patricia is also deeply committed to her family.

She proudly raises her two daughters, Mueni and Makena, instilling in them the values of hard work and resilience.

Her role as a mother aligns with her broader mission of mentoring and guiding the next generation of leaders.

Conclusion: A Legacy of Leadership and Innovation

Patricia Ithau leads with vision, innovation, and a strong commitment to social sustainability, from her strategic achievements at L’Oréal Africa to her current role as CEO of WPP-Scangroup.

Her dedication to advancing women in leadership, her contributions to the business community, and her efforts in developing future leaders make her a lasting influence on Africa’s corporate sector, inspiring and driving progress across the region.