AfriCatalyst, a prominent Dakar-based global development advisory group, has issued a call to African leaders for the establishment of a framework governing the issuance of African Methane Abatement Bonds (AMAB). This appeal coincides with the release of AfriCatalyst’s comprehensive report, accessible at [https://apo-opa.co/3ObUfOw], which illuminates the concerning escalation of methane emissions throughout the continent. The report underscores the immediate necessity for global action to mobilize resources addressing this environmental crisis.
According to the report, methane emissions in Africa have annually increased by 2 percent from 1990 to 2022, contributing a significant 14 percent to the global methane emissions total. Notably, 19 African countries are responsible for 80 percent of the continent’s methane emissions, with Nigeria, Sudan, the Democratic Republic of Congo, and Egypt contributing half of this total. Primary sources of emissions include the agricultural sector (51%), energy production (35%), and waste management (14%).
While nearly all African nations have outlined their Nationally Determined Contributions (NDCs), inadequate financing poses a hindrance to achieving these goals. Only 2 percent of global climate financing was allocated to methane abatement last year, with sub-Saharan Africa receiving a mere 6 percent of global methane financing.
AfriCatalyst’s report identifies avenues for increasing domestic and external financing for methane action in Africa. A high-level panel session held in November 2023, under the theme “Financing Methane Action in Africa” [https://apo-opa.co/3vSI6Yw], preceded the report’s launch.
Daouda Sembene, AfriCatalyst’s CEO and co-author of the report, highlighted the challenges facing methane action financing. However, he also emphasized the strong evidence supporting ambitious methane abatement objectives, asserting that achieving such goals will enable the continent to meet its commitments under the Paris Accord.
AfriCatalyst proposes that collaborative efforts by the top 19 African methane emitters could unlock additional funding. This could be achieved by leveraging available financing from various partners, including European Union grants, potentially totaling nearly 6.4 billion Euros under the Neighborhood, Development, and International Cooperation Instrument – Global Europe (NDICI). Technical assistance from reputable institutions such as the African Development Bank (AfDB), the International Monetary Fund (IMF), and the World Bank could complement this financial support.
Recognizing that additional financing alone is insufficient, AfriCatalyst calls for innovative solutions aligned with the continent’s realities. According to the International Energy Agency (IEA), the required spending for low-income and middle-income countries is $6.8 billion, while the continent needs $15-20 billion to reduce energy-related methane emissions by 75% by 2030. Innovative strategies, including increased domestic revenue mobilization, leveraging philanthropic funds, and recycling Special Drawing Rights (SDRs) through multilateral development banks like the AfDB, could address this gap.
In a webinar in November, Abdoul Salam Bello, Executive Director for the Africa Group II at the World Bank Group, observed that Africa is the least risky region for investment, with a default rate of only 5.5%, the lowest globally. He emphasized the need to alter the risk narrative through digital technologies, concessional funding, and establishing a unified platform for all investing instruments.
Dr. Al-Hamndou Dorsouma, Division Manager, Climate and Green Growth Development at the African Development Bank Group, added that in 2022, the bank allocated 45% of its budget financing to climate action, committing to meeting the Paris Agreement targets by 2025 through greenhouse gas accounting tools.
AfriCatalyst envisions the issuance of AMAB as a pivotal step towards mobilizing innovative financing to support the formulation and implementation of methane abatement measures outlined in countries’ national plans. The proposed AMAB framework aims to create a private investment vehicle supporting African Small and Medium-sized Enterprises (SMEs) and entrepreneurs in adopting practices contributing to methane emission reduction.
