Climate Finance in West Africa

Rich countries and multilateral donors have so far mobilised only 7% of the estimated $198.88 billion that West African countries need by 2030 to cope with the climate crisis and pursue their own green development.

According to a new Oxfam study today, Climate Finance in West Africa, 62% of $11.7 billion declared by donors between 2013 and 2019 have been mostly in the form of loans, which will have to be repaid, many with interest, aggravating the debt crisis in most West African countries.

Climate finance is a highly-contentious issue that again threatens the success of the crucial UNFCCC climate talks in Egypt this November. Oxfam and a hundred African civil society organisations are concerned that African countries will come to the summit with little confidence that donors will honour their repeated promises to mobilise 100 billion a year for climate action in developing countries (a target that has been missed by $16.7 billion in 2020).

These organisations are calling on rich countries -historically responsible for climate change -to assume their fair share to help the region face the escalating climate crises that have hit the African continent.

The report warns that rich countries are increasingly using loans to help West African countries cope with climate change. Between 2013 and 2019 loans have increased by 610% from $243 million to $1.72 billion. By comparison, grants have only increased by 79%. Among the donors that have made the most use of loans as a proportion of their total climate financing are the World Bank (94%), France (94%), Japan (84%), the African Development Bank (AfDB) (83%) and the European Investment Bank (EIB) (79%).

"At a time when West Africa is reeling from multiple crises including climate, hunger, and security, these financial flows are grossly inadequate and not what was promised. Many of these are now loans that actually reduce countries’ capacity to cope. Most countries are falling into a spiral of debt and poverty, which runs counter to the spirit of climate justice. The consequences are disastrous for millions of people who are paying the price for the impacts of climate change yet not responsible for it," said Assalama Dawalack Sidi, Oxfam's Regional Director for West and Central Africa.

The consequences of debt and the capacity of countries to provide basic services to populations facing multiple crises are very real. For example:

• Although Niger (7th most vulnerable country in the world to climate change), Mali (13th most vulnerable), and Burkina Faso (24th most vulnerable) all face a risk of debt distress, they have received a sizable share of climate finance in the form of loans and debt: 51%, 43%, and 41%, respectively. These countries are already being pushed into a new wave of austerity measures by the IMF and are planning combined budget cuts of $7.2 billion by 2026 which will further limit their ability to invest in quality public services and protection for their citizens.

• Ghana currently receives 40% of its climate finance in the form of loans and debt, despite already being at high risk of debt distress. In 2019, Ghana was spending 55 times more on debt servicing than on agriculture. It is planning a $23.3 billion budget cut by 2026.

Oxfam believes that funding in West Africa should focus on adaptation measures, rather than mitigation given the region is a very low contributor to global greenhouse gas emissions. However, there is an 82% gap between the adaptation funding reported in 2019 and the needs expressed by West African countries.

Chad, the world's most vulnerable and least prepared country for climate change, has the largest funding gap for adaptation with 95% of its financial needs not covered ($1.49billion of $1.57billion per year)by 2030.

These findings are all the more alarming given that hunger is increasing at an unprecedented rate in the region, in part driven by droughts that are becoming more frequent and severe as rainfall becomes more erratic and unpredictable. There has been a 154% increase in the number of people now food insecure between March-May 2022 compared to the five-year average between 2017-2021.

"We demand that all donors urgently increase their climate financing and honour their promises. These funds must be disbursed as grants not loans and must respond to the priorities and adaptation needs of recipient countries and their communities," said Sidi.

The report's recommendations support the recent joint statement by two dozen African leaders meeting earlier this month at a forum in Cairo, where they urged the richest countries to uphold their aid pledges so the continent can tackle the effects of climate change for which it shares little blame.

The report is being published ahead of citizen caravans organised by about 100 African civil society organisations, including Oxfam, that will travel across 23 countries on the continent to Egypt. The caravans will mobilise communities and policymakers along the way to highlight the harm that climate change is causing to Africa and demand more justice in climate finance.

"As Africa heats up, African communities’ temperature is rising too. Today, people are uniting to demand more climate justice. The international community, and rich donors, in particular, must urgently hear their cries," said Sidi.

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Notes to the editors

• Download the report Climate Finance in West Africa: Assessing the State of Climate Finance in One of the World's Regions Worst Hit by the Climate Crisis.The eight West African countries analyzed are Senegal, Mauritania, Mali, Burkina Faso, Niger, Ghana and Nigeria.
• The levels of climate finance reported by global donors in 2019 ($2.5 billion) represent only 12.7% of the average annual financial needs for external climate finance expressed by West African countries in their nationally determined contributions (NDCs) (covering the period 2021-2030). However, when considering Climate-specific net assistance (CSNA), current public funding that can be considered relevant for climate action would fall to 7.1% of average annual needs between 2021 and 2030, representing an alarming climate finance gap of 92.9%. The CSNA is a method of calculating climate finance developed by Oxfam, designed to be more equitable than the tools currently used by donors. The CSNA estimate includes 100% grants and grant equivalent of loans, guarantees and other debt instruments.
• Oxfam's estimate of net climate-specific aid is based on climate-related development finance as documented by the OECD.
• See the Aggregate trends of climate finance provided and mobilized by developed countries in 2013-2020 against the 100 billion annual targets, OECD, 2022
• Follow the caravans for the climate in Africa that will crisscross 23 African countries (Senegal, Benin, Niger, Ghana, Nigeria, Mali, Burkina Faso, Chad, Kenya, Uganda, Ethiopia, Ivory Coast, DRC, Gambia, Guinea, Malawi, Mauritania, Mozambique, South Africa, South Sudan, Togo, Zambia, Zimbabwe and Somalia) and will converge in Sharm el Sheikh, Egypt, at the time of the world climate conference (COP 27) from November 7 to 18, 2022. These caravans are a catalyst for the demands of African populations -especially youth and women-on climate finance (loss and damage, adaptation, and mitigation). They are organised by civil society organisations such as Young Volunteers for the Environment (YVE), CIDSE -International family of Catholic social justice organisations and a hundred others, with the support of Oxfam.
• According to Government Spending Watch, in Ghana in 2019, the total public debt service (external and domestic) reached 75 percent of government revenue, with domestic debt accounting for two-thirds.
• The Notre Dame Global Adaptation Initiative(ND-GAIN) index assesses a country's vulnerability to climate disruption and its ability to mobilise investment. Chad is ranked 182nd out of 182 countries.
• While some loans are concessional, Oxfam is even more concerned by the high prevalence of non-concessional finance among some donors, especially the AfDB ($454m; 43% of its total), United States ($308m; 39% of total), the GCF ($229m; 73% of total), France ($167m; 13% of total), and the EIB ($137m; 68% of total).
• The newly released report by World Bank Country Climate and Development Report (CCDR) for the G5 Sahel region estimates that up to 13.5 million people across the Sahel could fall into poverty due to climate change-related shocks by 2050 if urgent climate adaptation measures are not taken.
• 14 out of 16 West African countries plan to reduce their national budgets by a total of $69.8 billion between 2022 and 2026 due to pressure from the International Monetary Fund (IMF) through its COVID-19 loans, based on the World Economic Outlook Database of the IMF and Oxfam’s analysis Adding Fuel to Fire: how IMF’s demands for austerity will drive up inequality worldwide.
• According to calculations based on World Bank databases, an individual living in West Africa emits only 0.43 tons of CO2 per year. In comparison, a U.S. citizen emits 15.2 tons, with the global average being 4.5 tons.
• Oxfam’s report HUNGER IN A HEATING WORLD: How the climate crisis is fuelling hunger in an already hungry world shows that climate change is deepening hunger in 10 of the world's worst climate hotspots, including Burkina Faso and Niger. For food security projections, see the Food Security and Nutrition Working Group (FSNWG) estimates.
• African nations meeting in Cairo from 7 to 9 September call for climate change funding ahead of COP27.

Contact

Clare Cronin | clare.cronin@oxfam.org | +353 (0) 87 195 2551