By Faridat Salifu
The recent decision for the World Bank to host the Loss and Damage Fund has received applauds from world bodies like the United Nations, amongst others. The decision was taken last week, less than one month to the COP 28.
Before now, the committee and different stakeholders had earlier expressed fears that talks will breakdown during the Conference due to controversies surrounding the funding of the Loss and Damage Fund.
But there is still uncertainty as to how countries of the global south, especially those who have been affected by activities of the global north and high polluting countries like China, will access funds and how much they are to be given.
According to the Prime Minister of Barbados, Mia Mottley, nations in the global south are in a precarious situation where they are not equipped to address the threat posed by climate change despite being disproportionately affected by its effects, which are mostly due to historical emissions from the global north.
Low-income nations typically devote more than twice as much funding to debt repayment as they do to social assistance and 1.4 times more than to medical care.
This situation highlights the need for a more equitable financial architecture that supports climate change without further jeopardizing the finances of the global south and does not unfairly penalize them for issues that are mostly the result of wealthier nations. This entails historically high debt write-offs, debt restructuring, and the use of non-repayable grants to pay back climate loans.
Secondly, there is a huge funding gap that has to be filled in order to protect the global south’s nations from the worst effects of climate change. By 2030, they will need to raise $4.3 trillion.
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Budget cuts should not be applied to this spending; rather, it should be viewed as an investment. Actions have a higher cost than inaction by a wide margin.
Third, financial quality is important. Governments, MDBs, and NDBs should focus their public development funding on specific objectives in order to help turn climate change issues into shared investment routes that combine public and private funding.
A multiplier impact can be achieved by taking a mission-oriented approach, establishing specific goals, and elevating future expectations for corporate investments.
Strategic public investment can boost long-term competitiveness, open up new markets, and encourage investment from the private sector. For instance, a green loans program for heavy industry made it possible for Germany to establish a green steel industry.
Steel producers must adhere to low or zero-carbon processes and present documentation of compliance in order to be eligible. As a result, there is now a market for CO2 efficient steel.
There can be a multiplier impact from adopting a mission-oriented strategy, defining specific goals, and elevating future expectations for corporate investments.
Strategic public investment can also open up new markets, attract capital from the private sector, and boost long-term competitiveness.
The oil-rich United Arab Emirates is hosting this month’s COP gathering, which is unlikely to make much of an impact on this discussion. However, we need to improve if we hope to make significant headway.
There is a lot of funding available, but it’s time to focus more on quality than quantity.
