NAIROBI, July 5 (IPS) – Kenya is in dire need of climate finance. The country has been ravaged by climate change-related disasters for years. But as this analysis shows, schemes remain opaque, leaving affected communities vulnerable. Climate-related disasters have ravaged Kenya for years.
Five failed rainy seasons resulted in a drought, the worst in 40 years, affecting at least 4.5 million people in need of food aid. This was followed by months of heavy rains, triggering river and flash floods that affected more than 306,520 people (61,304 families) between March 1 and June 18, 2024, with an estimated 315 dead, 188 injured and 38 missing, while more than 293,200 people (about 58,641 families) were displaced, according to Relief web and Kenya’s National Disaster Operations Centre (NDOC).
This climate crisis puts major financial challenges between the East African country and its climate goals.
When the government pledged in 2016 to comply with the Paris Climate Agreement and reduce greenhouse gas emissions by 32 percent between 2020 and 2030, it was estimated that $40 billion in new investment would be needed to achieve that target.
Since then, the climate crisis has only intensified, and there is a need for financial support.
Now, according to Kenya’s updated Nationally Determined Contributionsthe country needs $65 billion to implement Kenya’s mitigation and adaptation requirements from 2020 to 2030. NDCs are at the heart of the Paris Climate Agreement as the country commits to reducing its greenhouse gas emissions.
“One of the three financial challenges Kenya faces is competing priorities as we spend more on climate mitigation (reducing greenhouse gas emissions) and very little on climate adaptation (adapting to the current and future impacts of climate change),” says Samuel Gikama, a marine scientist and independent climate researcher.
“This is a developing country with many pressing issues. We need to focus available resources where they have the greatest impact, and for us that is adaptation, because it has been shown to have immediate positive results for local communities.”
According to Gikama, Kenya’s climate finance management is opaque.
“(Kenya’s) Climate Change Fund has been in existence for five years now, but the fund does not seem to be operational,” says Gikama, explaining that it is difficult to track Kenya’s access to climate finance.
“Whatever the country raises in climate finance from public and private sources, and specifically how the funds are spent, is difficult to track. Climate budgeting remains fragmented. But the government raises about $1.5 billion a year.”
The Fund was established under Section 25 of the Climate Change Act 2016 as a funding mechanism to prioritise climate change action and interventions.
It is becoming increasingly clear how vulnerable Kenya is to climate change.
Climate-related disasters such as the prolonged drought of 2022-2023 and the recent deadly floods in 2024 have created an annual economic liability of around 2-2.8 percent of gross domestic product (GDP). This comes on top of several other vulnerabilities, such as the economic fallout from the COVID-19 pandemic, frequent locust infestations, and other crop pests and diseases.
The most recent analysis of climate finance is in the 2021 Kenya Climate Finance Landscape. The Nationally Determined Contributions indicate annual expenditure should amount to $4.39 billionincluding agriculture with USD 0.63 billion, water with USD 0.97 billion, renewable energy with USD 1.69 billion and other sectors with USD 1.11 billion.
Kenya’s total government spending on climate and nature is around USD 1.53 billion per year. Recent estimates indicate that the country has secured a third of the total funding needed for climate change adaptation investments. As such, there is an annual resource gap of around USD 3.5 billion and experts like Gikama say the country will struggle to meet its ambitious climate change targets.
Kamau Ndung’u, a Nairobi-based accountant, tells IPS that debt-ridden Kenya must take the climate crisis into account when allocating resources.
“Budget estimates for the 2023-2024 fiscal year indicate that our spending on debt service and pensions will increase from 44 percent to 49 percent. The rest of the budget, 51 percent, will be used to implement all other government programs across the country. The national government has over the years allocated itself a greater share of the financial resources at the expense of the county levels.”
Gikama agrees, saying that given limited resources, there is a need for a reorientation of the climate action agenda.
“Kenya’s GDP depends on sectors that are highly climate-sensitive, including agriculture and tourism. Yet critical areas such as agriculture, forestry and water remain underfunded. Climate change has had a particularly severe impact on agriculture and water resources. In the absence of adequate funding, local communities are unable to cope with changing weather patterns, especially farmers. Nearly 98 percent of our agriculture is rain-dependent.”
Atieno Oloo, a financial expert at the Ministry of Finance, says the country is investing in climate action with public and private capital.
“The government is matching scarce resources with needs. The Department of Finance is currently working to distribute $56.9 million to 45 provinces through the Financing Locally Led Climate Action program.”
The money is a grant from the World Bank and its partners. The most recent estimates show that the government invested a total of $2.4 billion in climate action. Public investment, including financing from both domestic and international providers, accounted for 59.4 percent of this, with the private sector providing the remaining funds.
“Available estimates show that more than half, 55 percent, of government climate-related spending comes from international partners, while 45 percent is domestic government financing. Kenya and all other struggling developing countries should receive climate financing through the Loss and Damage Fund,” Gikama says.
Together, African countries are responsible for less than three percent of global greenhouse gas emissions. Kenya is responsible for less than one percent of global emissions. Developing countries first indicated the need for a loss and damage fund in 1991.
The fund would provide financial assistance from those most responsible for the climate crisis to address the loss and damage caused by climate change. It has taken 32 years of mounting pressure and 27 COP summits to finally deliver a Loss and Damage Fund at COP 28, UAE.
“Kenya and all other affected countries must focus on this fund and demand accountability. It is unacceptable that about 79 percent of international public climate finance came to us as debt and that more than half of that, 55 percent, was spent on climate mitigation. The rest, 45 percent, was spent on climate adaptation. The adaptation sector is second, despite all the evidence that this would be our highest return on investment,” he stressed.
According to government estimates, private finance accounts for about 41 percent of the country’s total climate finance. Of this, Kenyan companies mobilized 34.4 percent and the remaining 65.6 percent came from investments by foreign private companies in Kenyan projects.
While Kenya’s financing needs span energy, water, agriculture and forestry, estimates show that foreign private sector investments are overwhelmingly (99.7 percent) in renewable energy projects. Philanthropic organizations remain the only international private sector actors investing in other climate sectors and, more so, in adaptation-related projects in sectors such as water.
The Loss and Damage Fund is a rescue and rehabilitation package for poor and vulnerable developing countries that are severely affected by climate change. The fund currently contains approximately USD 700 million.
The $100 billion fund, agreed before the Paris Agreement, aimed at helping developing countries reduce greenhouse gas emissions and adapt to the adverse impacts of climate change, has consistently fallen short of its targets. The goal was to mobilize $100 billion per year by 2020 from a variety of sources, including public and private, bilateral and multilateral, and alternative sources of finance. According to OECD In 2021, the total climate finance provided and mobilized by developed countries to developing countries amounted to USD 89.6 billion.
Developing countries need at least $400 billion a year to address climate-related challenges. As the climate crisis escalates, the need for financing will only increase.
For countries like Kenya, the path to climate finance appears narrow and winding.
IPS UN Office Report
Please note: This feature is published with the support of the Open Society Foundations.
© Inter Press Service (2024) — All rights reservedOriginal source: Inter Press Service
