African regional policy needs to be consistent – Dr Amin Adam

The Minister of State at the Ministry of Finance, Dr Mohammed Amin Adam, has underscored the need for Africa's political environment to remain stable for policy consistency.

According to him, recent political unrest in some regions of the continent was damaging to governments’ efforts to tackle climate change.

Speaking at the 2023 Africa Climate Summit in Nairobi on the topic “Creating a supportive policy environment to attract green Foreign Direct Investment,” Dr Adam noted that policy consistency was an essential element needed in the continent’s pursuit of investment financing.

He indicated that the time was right for Africa to guard itself against acts that tend to undermine its regional stability and cooperation and forge ahead to tap its abundant opportunities for the general good of its citizens.

He said conflicts and political instability in one country can have negative spillover effects on neighbouring countries regardless of how strong their structural reforms and policies were. That, he indicated, could significantly affect foreign investment flow in the region.

‘’Overall, conflict in Africa can have far-reaching and complex consequences for international investment and regional economic development. Governments, corporations and other stakeholders must collaborate to address the core causes of conflict and create stability and security and prosperity,’’ he implored.

On scaling high-impact climate finance for Africa and reducing the cost of capital through blended finance as well as creating a supportive policy environment to attract green international investment, the Minister stated that high-level ratio instruments such as green bonds had emerged as a promising tool to mobilise substantial financial resources for climate projects.

He, however, underscored the need for enhanced awareness and capacity building among African nations as a number of them still lacked the expertise to structure and issue instruments effectively.

‘’Again, there is the need for standardized frameworks and certification processes that instil confidence in investors. Harmonizing these standards at a regional level could facilitate cross-border investment and boost investor confidence,’’ he noted.

In a related development, the Minister in a separate panel discussion on ‘’From commitment to action, creating fiscal space for climate action, agenda 2063 and the SDGs in Africa’’ said, the goal was not to survive climate crisis but to work together to achieve a desirable prosperity despite challenges.

He discussed several difficulties facing the V20, including accessing capital, underrepresentation of climate-vulnerable countries in global governance and international trade mitigations.

Dr Adam said a comprehensive global funding mechanism was required if Africa was to realise climate prosperity. To that end, he called for an international financial reform agenda, where multilateral development banks, especially those operating on the continent would scale up their resources towards climate-related activities which would enable regional institutions' strategies to work effectively.

"Another way to address the challenge of creating fiscal space for climate action is for the global system to move away from austerity measures while accounting for the impact of climate change in debt financing,” he added.

He stated that regions facing higher vulnerability to climate change were more likely to suffer from severe indebtedness. So, to address that, there was the need to refine analysis tools such as debt sustainability analysis to make available liquidity for such countries and consider climate contingency swap lines between central banks or other liquidity opportunities.

Another essential indicator the Minister raised was securing global deals on carbon exchange to realize near-term investments.

According to him, it was incumbent on the part of the advanced countries to work closely with vulnerable countries to di-carbonize the economy rather than rejecting products coming from Africa on the accusations of high carbon content.

The 2023 Africa Climate Summit was held to address Africa’s increasing exposure to climate change and its associated costs on the continent under the theme ‘Driving Green Growth and Climate Finance Solution for Africa and the World’.