The recent ease in global demand for the blue metal cobalt has dampened concerns about a pending supply crunch. Earlier reports predicted that ... the world’s appetite for batteries would lead to a situation of demand outstripping supply for cobalt by the end of the 2020s.
The African Development Bank’s head of climate change, Anthony Nyong, has said that the continent will soon require $40bn per annum to counter hostile climates, including $30bn in adaptation, and $10bn in mitigation.
Unfortunately, such requests, lobbied via the United Nations Framework Convention on Climate Change (UNFCCC), is bound to fail. Hard numbers reveal that between 2004 and 2011, just $132 million in adaptation funds had been received.
The trillions in outstanding ecological debt and reparations – conservatively calculated by ecological economists at the University of California, Berkeley – owed by polluting regimes were swiftly dismissed by the European Union and US. In its place came the slippery language of neutral and depoliticised voluntary assistance, eliding accountability.
But the focus on figures and other labels pasted across the marketing of COP (facilitating the conceptual build-up of change) overlooks a greater systemic problem: the lethal, ‘invisibilised’ undertows that shape ecological markets.
This is quite clear, as the guiding principles of the UNFCCC do not recognise intrinsic value – value for ecologies in their own right, as living systems. The necessity of changing the relationship between humans and ecologies based on higher value systems is ignored.
Rather it merely formulates and locates recycled solutions as equity, based on economic utility or cost benefit analysis of ecosystems.
Given this narrative, the push from green capitalism to appropriate and privatize, as properties, ecosystems including forests, land, air, water, as tradeable commodities, is par for the course.
Nature, the final frontier, is transformed into an abstract market through commodification and financialisation – not merely as a resource, but in its very construction.
Yet, instead of resolving problems, we are merely deepening and enhancing the same. Sure, these green roadmaps would be, in theory, located in the context of rights.
But rights are sometimes only paper thin. Even the much lauded South African Constitution has an ‘escape clause’ (Section 36) rendering the rights landscape vulnerable ideological valuation systems.
To contain, hollow and reshape institutions advocating for climate ‘justice’, the role of climate funding for impacted nations has been acknowledged, devoid of any political accountability.
Yet this recognised vehicle of addressing imbalances in depleted and damaged global ecological resources has been located in a logic used by the advocacy groups that reproduces the power of the polluters.
For this reason, the logic of monetised reparations eliding changes to systemic flaws prevents advocacy movements from effecting real change. It can even be argued that the very money used by advocacy movements co-opts the imagining of solutions, limited within acceptable ‘deliverables’ or outputs that work well in events (and ‘eventising’ change), but far less so in the world of those impacted.
Such damaged resources mainly consist of the ‘GDP of the poor’ – a term coined by former banker and the man largely credited with putting natural capital ‘invoiced-utilities’ on the map, Pavan Sukhdev.
Climate funding is perceived to arrive through the financial vehicle known as the Green Climate Fund (GCF), a financial mechanism of the UNFCCC, tabled at $100bn annually.
Yet, following Durban’s COP17, and Qatar’s COP18, the source of funding defined as being from “a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance” has yet to be clarified in terms of how and when resources would be mobilised, and the relative share of each polluting nation.
But what is the quality of this fund?
Whilst the Green Climate Fund (GCF) was theoretically proposed to give developing countries and national institutions more of an equal voice, the concept of a private sector facility within the fund has been prioritised for its 2013 roadmap.
This is said to enable it “directly and indirectly finance private sector mitigation and adaptation activities at the national, regional and international levels.”
The GCF has yet to identify public sources of funding, though it is assumed that the facility will act as a scale-up tool for private sector funding. This bears similarity to the AfDB’s claims that for every $1 invested from the GCF, $4 has been attracted via co-financing.
But is the facility the inverse of direct access?
The concept driving it is the idea of leveraging private finance to ‘move’ US$1trn. The model proposed is the World Bank’s private sector lending arm, the International Finance Corporation (IFC).
Assessments of the IFC investments found less than 29 percent flowed to the poorest countries; and almost 40 percent went to Brazil, India, Russia, China and Turkey.
The Bank’s own Independent Evaluation Group found that just 13 percent of investments had an ‘explicit focus on the poor,’ while just 2.4 percent was invested in small and medium business in low income countries, with all funds flowing through a financial intermediary funds (FIF).
The use of FIFs as leveraging vehicles for the private sector remains a threat, though it is ardently backed by polluting regimes. Many of these FIFs are located in tax havens.
29 of the 35 Norway’s Norfund vehicles are based in tax havens, such as Mauritius, the Cayman Islands, Delaware (US), Luxembourg and Panama. The same can be applied to others, including 7 of 12 funds belonging to the European Investment Bank (EIB).
Once donors disburse funds, the pledge is considered ‘fulfilled’ whether or not the funds reach the African country.
These FIFs are rarely monitored from the way in which funds are used, as no accountability is required from the period of deposit to disbursement – hence the flagrant use of tax havens.
It means that the entities using the funds are out of sight and impossible to accountably track. The nature of investments and other important concerns – such as inflated costs, mis-pricing, fictive investments, money laundering – are uncertain.
Civil society critics like Bobby Peek claim that few FIFs align projects with the needs of developing countries.
According to the World Bank, FIFs account for the largest share of funds held in trust by the Bank, doubling during the past five years. The Bank currently acts as a trustee for 18 FIFs, with 32 percent of value primarily related to environment and climate change themes.
The Clean Technology Fund (CTF), one of the Bank’s climate FIFs described as crucial for leveraging power, attracts $6 for every $1 in co-financing: $35 billion from $4.4 billion, with 30 percent from the private sector, claims its current homepage.
Curiously, of the $1.5 billion approved for projects in Africa, no funds have allegedly been disbursed in Africa.
One member of the African Development Bank (AfDB) informed me that while African governments were labeled opaque, some of the financial workings of the EU and other bodies, were similarly veiled.
“Financial intermediaries in the last 15 years, of generic development finance and more recently in climate finance, have been characterised by deficits in accountability, transparency, and responsiveness and have demonstrated inadequate safeguarding standards,” said Dr Sarah Bracking, from the University of Manchester’s School of Environment and Development, columnist at The Africa Report.
She strongly backed the concept of direct access and ownership. “FIFs tend to absorb excessive fees, remuneration and payments as joint shareholders, all of which represent an unacceptable loss to the funders of climate finance, and recipients.
“With a large Secretariat envisaged for the new Green climate fund, decisions should be in-house, reducing the costs of administration and financing overheads,” stated Bracking, author of Money and Power (Pluto).
But not all self-reported funds were invested in climate-related purposes. Of the $23.6bn – $34bn in self-reported donor funds related to Fast-Start Financing, mainly from Japan (40 percent), the US (22 percent) and the EU (28 percent), just $3bn was found to be ‘additional’, and less clear, how much is ‘new’. Africa took a big chunk of expected value from FSF – between 19 percent – 26 percent.
But how much materialized and what was the intent behind the capital?
Japan, for instance, funded almost $3bn in coal-fired plants and other fossil-fuel intensive projects (Indonesia, Brazil). Mitigation financing came chiefly in the form of loans, export credits and loan guarantees, while adaptation allegedly accounted for less than 25 percent.
In Africa, countries like Tunisia received climate funding from Italy to install military surveillance along the coast, allegedly to prevent migrants from penetrating EU shores.
As much as 48 percent of Africa’s climate funding from FSF, is estimated to have arrived in the form of loans, despite 40 percent or more of total FSF capital packaged as grants.
Of the $1.97bn pledged to the largest projects in Africa, nine related to mitigation and eight were loans.
Already pledged funds – such as Official Development Assistance and Global Environment Facility, via countries including US, Norway, among others – were perceived as repackaged, neither new nor additional. This included $10bn in the case of Japan’s $13bn.
Moving away from FSF, figures from the AfDB, about the global financial landscape, reveal that while adaptation is the main concern for Africa and other nations, it is mitigation – a profit-rich sector that sees to the transformation of economies from high to low carbon, that received 100 percent of private sector funding.
This funding constitute more than 50 percent of all climate funding.
‘Offsets’ were also 100 percent directly invested in mitigation, while just 3 percent of fund and multilateral value flowed to adaptation.
In total, just 5 percent of total global climate funding went to adaptation – helping African economies come to terms with ruined and depleted ecologies.
This was to sustain and protect ecologies described by the head of UNEP’s Green Economy report – Sukhdev, as comprising 45-90 percent of the GDP of the poor in some developing countries.
Ultimately, Africa pays the price for parasitical and free-riding behaviour, more so when the financial sector hijacks the path towards which developing nations will access the funding, by using public funds for private investor interests.
For African countries, it is first come, least and last served.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options