Africa’s development goals are far from being achieved. Two-thirds of the way to the UN’s 2030 Agenda deadline, only 2 out of the 17 SDGs show significant progress in Africa, while the average level of implementation of all 20 Agenda 2063 goals was 55% at the end of the First Ten-Year Implementation Plan (FTYIP) 2014-2023.
Africa’s development and climate needs are huge
Africa still has a long way to go, with 4 priority areas:
Economic transformation
Capacities of governments and financial institutions
Climate change preparedness
Living standards
Estimates of Africa’s development financial needs range from $900 billion to $1.3 trillion annually - about 43% of Africa's GDP.
Source: MIF based on AUDA-NEPAD, UNECA, WEF, OECD, Climate Policy Initiative, PIDA, IMF, IEA & AfDB
Africa: multiple estimated financial needs and gaps from various sources (2020-2040) ($ billion)
The Paris Pact for People and the Planet (4P), June 2023
No country should have to choose between fighting poverty and fighting for the planet.
Climate change will cost Africa’s GDP up to $50 billion annually by 2030. Despite being a net carbon sinker, Africa suffers disproportionately from the effects of climate change, yet the focus on mitigation ignores Africa’s adaptation priority.
Between 2020-2030, Africa needs $2.8 trillion to fulfil its NDCs at $29.5 billion in 2022, climate finance for Africa covers less than 11% of estimated needs - estimated at $277 billion per year.
Financing climate needs cannot come to the expense of development.
According to the UNFCCC, only 7% of the climate finance provided from 2011 to 2020 is found to be 'new and additional' to existing ODA commitments from high-income countries.
Climate: adaptation, not mitigation
According to the AfDB (2022), Africa loses between $7 billion and $15 billion annually due to climate change, to around $50 billion per year by 2030.
Africa’s risk perception contributes to a $200 billion trade and investment gap. In 2022, FDI to Africa represented only 3.3% of total FDI, while just 2 African countries are labelled as ‘investment grade’.
Risk assessment
Debt
Increasing complexity in debt structures add hindrances to relief options, with public debt and servicing costs tripling since 2009.
Overseas Development Aid (ODA)
Africa receives ⅓ of total global ODA, but specific conditions are often attached by Western donors - much of ODA from DAC countries is directed mainly to health and education.
Despite significant potential, external resources are not efficiently used.
Where is the money?
External sources: a problem of processes
Africa receives 1/3 of total global ODA
Public debt and servicing costs tripling since 2009
3x
FDI to Africa represented only 3.3% of total FDI
15 out of 20 countries globally with the highest external public debt servicing cost as a share of total revenue are African (2024)
3.3%
1/3
Oulimata Sarr, National Program Coordinator, International Trade Centre
We are at a point where Africa can no longer rely on external partners to finance its own development.
A radical reboot of the global multilateral financial architecture and processes is needed. For example:
Reallocation of additional SDRs
Implementation of Loss and Damage Fund
Suspension of specific surcharges and conditionalities
Release of ODA dormant funds
Mo Ibrahim
What is needed is not more money, but smarter money.
A total of $435 billion, or 15% of Africa’s GDP.
Not only does Africa hold 30% of the world’s mineral reserves, but there is vast carbon-sinking potential, with up to $100 billion worth of carbon credits available annually by 2050.
Leveraging remittances, sovereign funds, and pension funds
Monetising Africa’s green assets
Strengthening tax systems
In Africa, the average tax/GDP ratio is 15.6% - half the OECD average (34.1%).
Preventing leakages through IFFs
Annual average loss is up to $100 billion - higher than ODA or double FDI received.
According to the African Union, Domestic Resource Mobilisation should represent on average per country between 75-90% of the financing to achieve Agenda 2063.
Leveraging internal supplies remains a key potential for fulfilling development goals in Africa.
The potential is there:
Unlocking Africa’s own resources
Akinwumi Adesina, President, African Development Bank Group
There is global underinvestment in supporting Africa to unlock the full potential of its vast renewable energy sources. This is unfair, unjust and unacceptable.
Africa holds 30% of the world’s mineral reserves, many of which are critical for renewable energy and low-carbon technologies.
What is needed is not more money, but a complete change of paradigm.
Instead of a trade-off between development and climate, reconciling both for still developing countries
Cooperation, not aid/charity approach on IFFs, tax systems, green assets etc.
Focus on better money, not more money - a radical reboot of the current multilateral financial system
Move from donor dependency to a more African-owned growth and development model, leveraging the continent’s key assets.
Mo Ibrahim
Our conclusion is clear: the money is there. What is needed is a paradigm shift. One that avoids any trade-off between climate and development.