The recently concluded COP27 global climate talks witnessed the continent triumph over a status quo of consistent failed promises of $100bn in climate financing from rich nations.
The launch of the African Climate Risk Facility – a $14bn local, market-based funding tool to help African countries increase the resilience of their vulnerable communities – is a wake-up call for a world frustrated by the hollow commitments of wealthy countries. The financing is a climate solution designed by Africa, for Africa, to support losses and damage (L&D in climate negotiations jargon) caused by climate change. And it should serve as an example to Asia.
Of course, COP27 did eventually reach a historic agreement to set up an L&D fund. But the developing world is used to hearing big promises that never see the light of day. The $100bn in climate financing was supposed to reach poorer nations by 2020. That year has passed, and the figure has since become irrelevant. Pakistan alone requires more than $30bn to recover from just the direct losses caused by this year’s catastrophic floods.
Why should the new loss and damage fund prove any different? At the moment, it is an empty account. Who will contribute what is yet to be decided. It took the United Nations-sponsored COP process more than a decade and thousands of natural disasters to agree on establishing the fund, so one can only imagine how much loss and damage climate-vulnerable countries will have to bear before the money begins to flow.
There’s another risk too. By establishing an L&D fund while omitting language on phasing out fossil fuels, COP27 has come dangerously close to allowing rich countries to damage the planet as much as they please as long as they promise to pay for it after the fact.
The message from the UN climate conference is clear: Save yourselves. Africa has heard and responded.
“This is the African insurance industry saying let’s come together and try and solve this ourselves,” said Kelvin Massingham, director of risk and resilience at FSD Africa, one of the partners behind the launch of the African Climate Risk Facility.
A group of 85 insurers in Africa created the fund, which is designed to provide protection against droughts, floods and tropical cyclones by providing climate risk insurance to African governments, humanitarian agencies, cities and non-governmental organisations.
By launching a $14bn climate risk facility, Africa showed it is running out of patience for the West’s failed promises.
To be clear, the idea is not to stop holding the Global North to its commitments. It is vital that rich nations be pressured to deliver on their word and for them to be called out over their failures. But by simultaneously taking matters into its own hands, Africa is helping to underscore the gap between the West’s big words and their negligible action while also making a bold statement: It will not allow others to dictate its future.
Above all, the African Climate Risk Facility’s mandate is to provide a domestically funded alternative to similar global initiatives, such as the World Bank’s Global Risk Insurance Facility and the Global Shield Financing Facility. Such local alternatives will inevitably free disaster-hit Africa from the pain of pleading and competing for climate financing only from others. The African effort builds on a similar initiative in the Caribbean, where a risk-pooling facility has existed since 2007.
At the same time, the African initiative shows how the continent recognises that climate change is a borderless issue and requires borderless thinking to find solutions.
Climate-vulnerable Asia must take note. Asian nations — including Myanmar, Pakistan, the Philippines, Bangladesh, Thailand and Nepal — are among the countries most threatened by climate change, according to the Bonn-based non-profit Germanwatch.
While pushing rich countries to lower their emissions and to pay for the damage they have caused, Asian countries too must now come together to build a self-reliant, self-sufficient, self-accountable mechanism that can help them develop resilience against climate losses and damage.
They can no longer wait for the West. Like Africa, they must move to shape their own destiny.
By Rizwan Basir – Sociologist and climate finance specialist, Climate Resourcing Coordination Center, Pakistan / Aljazeera