US Govt Reaffirms Commitment To AfDB-supported Climate Adaptation Benefit Mechanism

Posted by Eric Ojo Africa, Latest Headlines, World News Friday, June 2nd, 2023

(AFRICAN EXAMINER) – The American Government has reaffirmed its resolve and commitment to support the climate Adaptation Benefit Mechanism, which is driven by the African Development Bank (AfDB).

Under the Adaptation Benefit Mechanism, development partners, consumers, funds and philanthropists will sign purchase agreements for Certified Adaptation Benefits. Project developers will use these as collateral to raise private sector debt, equity and in-kind contributions.

Adaptation Benefit Mechanism projects will also incorporate an approved methodology defining the expected adaptation benefits and enabling certification of outcomes that lead to the achievement of desired impacts.

The programme was launched in a pilot phase in 2019, and two pilot projects are under development: one for climate resilient cocoa in Côte d’Ivoire, and another for rapid deployment dams to counter flooding in Lagos, Nigeria.

United States Treasury Deputy Assistant Secretary, Margaret Kuhlow gave the assurance while speaking at one of the panel discussions, hosted by the AfDB during its 2023 Annual Meetings in Sharm El Sheik, Egypt.

The panel of experts highlighted Africa’s urgent need to implement measures to drive climate adaptation, while also stressing a number of obstacles, including the difficulty of measuring and monetizing adaptation efforts.

Speakers included representatives of the AfDB, development partners, and development beneficiaries. It was stressed that innovative approaches and solutions will be critical to scale up adaptation efforts across the African continent.

This, according to the panelists, includes the Adaptation Benefit Mechanism and the Africa Adaptation Acceleration Programme. The latter is a joint initiative between the AfDB and the Global Center on Adaptation.

Kuhlow said the Biden administration had equally committed to support the Adaptation Benefit Mechanism in its 2023/2024 budget.

She added that President Biden’s administration had launched the President’s Emergency Plan for Adaptation and Resilience (PREPARE), adding that its goal was to extend assistance to 500 million of the world’s most vulnerable people.

She further explained that people usually think of energy when they hear the word “climate,” but that in many parts of the world, according to her, climate means water: too much or too little.

The Treasury Deputy Assistant Secretary also disclosed that the United States was committed to the adaption agenda, with its efforts in Africa channeled through the AfDB via the African Development Fund.

Opening the discussion, the AfDB’s Vice President for Power, Energy, Climate and Green Growth, Kevin Kariuki, said climate investments favored climate mitigation over adaptation, but that this was not to Africa’s benefit.

“Many adaptation projects are small-scale and context specific. The micro, small and medium enterprises that would implement these projects are unable to access the international private funds because they lack collateral or expertise to apply”, he added.

Kariuki also observed that climate adaptation projects typically yield little cash flow, although they deliver hard-to-monetize public goods.

“The donor community has been seeking adaptation metrics to drive efficiency and enhance support, but alas, the metrics for adaptation do not exist today”, he further explained.

In his remarks, AfDB Manager, Gareth Phillips pointed out that the bank has a number of live adaptation initiatives which are ready to receive contributions, adding that the AfDB was working to raise as much as $50 million in funding to capitalize a new fund, tentatively named the “African Adaptation Benefit Fund”, which is expected to be launched at the next global climate summit (COP28) this November.

He said the funds will be used to purchase Certified Adaptation Benefits to kick-start the Adaptation Benefit Mechanism and will also provide technical assistance and support the operation of the Mechanism’s Executive Committee and establishment of a secretariat.

Similarly, the Global Center on Adaptation’s Acting Regional Director for Africa, Charles Nhemachena said the Africa Adaptation Acceleration Programme is working to mobilize $25 billion over five years to accelerate and scale climate adaptation action across the African continent.

Nhemachena also disclosed that over the last two years, the programme had influenced more than $5 billion worth of downstream investments that had been supported through the upstream facility. One example is the AfDB’s Banjul port project in The Gambia, for which the upstream facility had provided climate risk testing.

Development partners and beneficiaries of the AfDB’s initiatives to drive climate adaptation took part in a second panel discussion. They included Daouda Ndiaye, Manager for Climate and Environment at the Islamic Development Bank and a member of the Adaptation Benefit Mechanism’s Executive Committee; Phil Stevens, Alternate United Kingdom Governor of the AfDB’s Board; Adama Kone, AfDB Executive Director for Côte d’Ivoire.

Stevens said the new Climate Action Window of the African Development Fund—the Bank’s concessional lending arm—had created an opportunity for private investors to channel funds for climate adaptation.

Notably, during the AfDB’s Annual Meetings, the United Kingdom announced the launch of two projects under its “Room to Run” guarantee program, a $2 billion guarantee provided to the bank. The guarantee will allow the bank to provide an additional $2 billion of climate finance to Africa by 2027, with a 50-50 split between climate adaptation and mitigation.

Meanwhile, the AfDB is a pioneer among global multilateral development banks in terms of the share of its climate financing that goes to climate adaptation. Its climate adaptation funding increased from 49 percent in 2018 to 55 percent in 2019 and 63 percent in 2020.