Through their research and engagement, think tanks can play a key role in unlocking new and existing sources of climate finance, as well as helping governments ensure that their climate investments are generating positive and lasting impacts for their citizens. Building on research by the Advocates Coalition on Environment and Development (ACODE) and other think tanks in East Africa, this post presents some key climate financing opportunities in the region and offers some suggestions for a way forward.

[Editor’s note: This is the second post in a blog series on think tanks and climate change, edited by Nikki Lulham and Erika Malich. This post was written by Dr Sabastiano Rwengabo, a political scientist and research fellow at the Advocates Coalition on Environment and Development (ACODE) in Kampala, Uganda. ACODE is one of 43 policy research institutions that receive support from the Think Tank Initiative.]

Climate change is threatening East Africa’s socio-economic future, and investments are needed to help overcome these threats. Financing climate change interventions is as important as stowing food grain in a granary; you provide for your community’s and economy’s future by safeguarding basic needs and planning ahead. Climate financing does just that – it helps countries to facilitate mitigation measures, enhance their ability to adapt to change, and increase overall resilience to climate shocks.

The amount of finance available for climate change interventions in East Africa, however, is currently inadequate compared to what is needed. Take Uganda, for instance. The Advocates Coalition on Environment and Development (ACODE), a think tank based in Uganda and where I work, analysed climate financing in the country. The estimated cost of climate change responses is UGX 664 billion (US$ 258 million) per year, which is approximately 1.6% of the country’s GDP. However, the Uganda National Climate Change Policy, released in 2012, is not clear about how these responses will be funded.

For climate interventions to be effective, they need to have dedicated resources behind them. Thankfully, there are a number of climate finance opportunities that are emerging in the East African region, some of which are described below.

Leveraging international commitments and donor funding

There have been a number of new international commitments under the United Nations Framework Convention on Climate Change (UNFCCC) in recent years, with contributions to financial instruments like the Adaptation Fund. These commitments are helping to increase financial flows to East Africa for addressing climate change. In Uganda, about US$13 million (of an anticipated US$40 million) has already been received to this end from various international funding sources.[1]

At the same time, many multilateral, regional, and bilateral donors are also making important contributions to climate finance in the region. In Tanzania, public expenditures relating to climate change increased from 4.2% of the country’s total budget in 2009/10 up to 6.5% in 2012/13, mainly due to increased funding from international donors.[2]

However, institutional capacity needs to be strengthened across the region to better attract and efficiently manage foreign and intra-regional funding. This will help encourage donors to sustain their contributions, while also facilitating better management of national budget allocations toward addressing climate change.

Directing growth in public revenues towards climate finance

The region has experienced a lot of economic growth in recent years, which translates to growth in public revenue and potential new funding sources for climate interventions. For instance, Rwanda’s economy grew at 7% in 2014 and 6.9% in 2015, an improvement from 4.7% in 2013.[3]  Similarly, Tanzania has experienced an average GDP growth of more than 6% per annum since 2000, while other countries in the region are developing at about 5% per annum.[4]

However, to leverage these domestic gains for climate finance, tax revenue management needs to be improved, combined with making climate change a national priority. Expanding and strengthening domestic and intra-East Africa revenue collection and management systems will increase the region’s financial capacity to implement climate initiatives. Equally important is deepening regional cooperation through platforms like the East African Community Climate Change Policy (EACCCP), which help to enhance synergies and promote joint efforts on issues like drought response and managing shared water resources.

It is often assumed that industrialised societies, being the largest emitters of greenhouse gases, should bear sole responsibility for financing climate change responses. However, less developed countries like many in the East African region are generating more and more emissions, largely due to increasing energy demand and growing industrialisation. Climate change is indiscriminate, and governments in the region must also do their part to help fund appropriate measures.

Building more Public Private Partnerships

Public private partnerships (PPPs) are joint arrangements between public and private organizations that leverage strengths from each sector to deliver a particular good or service. When it comes to climate change, PPPs could be particularly effective for initiatives like developing and maintaining climate-resilient infrastructure, which are costly projects, or scaling up successful agricultural interventions, such that a greater number of farmers benefit from technologies that protect or even grow their yields.

Why are PPPs important opportunities for climate finance? They create a fusion of interest between the public and private sectors to jointly invest in climate-related businesses and interventions. They also facilitate research and development, which can lead to new innovations and products that are more climate responsive.

For more of these partnerships to unfold, however, governments need to better understand business drivers and help to create more enabling environments for private sector involvement. Approaches can include providing fiscal incentives to businesses such as tax cuts, more clearly articulating the business case for climate investments, and developing policies or plans that better take into account how businesses operate. 

Looking forward

Climate change threatens East Africa’s socio-economic and environmental fabric, and yet, financing for responding to climate risks remains inadequate for meeting present and future needs. Thankfully, some promising opportunities are emerging, as research led by ACODE and other think tanks in the region is helping to illustrate. These opportunities can help to enhance capacity within East Africa for governments to invest in measures that improve mitigation and adaptation efforts, and contribute to greater resilience.

In addition to helping national governments access new and existing sources of climate finance, think tanks can also support them in aligning funds with national climate policies and development plans. ACODE, for instance, contributed to the development of Uganda’s National Climate Change Policy, and also helped with integrating climate change into Uganda’s National Development Plan (2015-2020). Furthermore, they are now helping to inform the country’s new Green Growth Strategy, which stresses climate-change responsive development.

By leveraging existing funding sources, deepening international and intra-regional cooperation, and strengthening institutional capacity, the region will be in a better position to increase the overall amount of financing available to address climate change. Efficient use of this funding will help to reduce risk from climate impacts, while also helping to safeguard East Africa’s socio-economic future.

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[1] These funding channels include: the Global Climate Change Alliance (GCCA) of the EU; Global Environment Facility (GEF); the UK-funded International Climate Fund (ICF); the Forest Carbon Partnership Facility (FCPF) Readiness Fund; Germany’s International Climate Initiative; and Japan’s fast start finance. See Netherlands Ministry of Foreign Affairs, et al., Climate Change Profile–UGANDA (Wageningen: Centre for Development Innovation (CDI), 2015

[2] Pius Yanda, Deograsias Mushi, Abdallah Issa Henku, Faustin Maganga, Honesty Minde, Nico Malik, Adolphine Kateka, Neil Bird and Helen Tilley, Tanzania National Climate Change Finance Analysis (London: Overseas Development Institute), 2013 (from https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8627.pdf, 5 Oct 2016)

[3] World Bank, Country Overview – Rwanda (online: World Bank) [http://www.worldbank.org/en/country/rwanda/overview, accessed 5 Oct. 2016]

[4] UNDP and United Republic of Tanzania, Tanzania Human Development Report 2014: Economic Transformation for Human Development (Dar Es Salaam: Economic and Social Research Foundation), 2015 (available at http://hdr.undp.org/sites/default/files/thdr2014-main.pdf, accessed 5 Oct 2016)

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