Setting the Stage for African Climate Leadership: A conversation with Bogolo Kenewendo

By Nick Hay, Climate Champions Team | June 3, 2024

Global Economist, Bogolo Kenewendo. Credit: Uyapo Ketogetswe, Bona267.

Bogolo Kenewendo is a global leader in Pan-African development, specialising in sustainable trade and investment, and accelerating innovation across the continent.

Until recently, Bogolo was the Special Advisor to the UN Climate Change High-Level Climate Champions, and Africa Director, where she played a leading role in implementing the Champions’ plans for accelerating ambition and action in Africa, and delivering a transformative COP 27.

As one of the founders of the Africa Carbon Markets Initiative, Kenwendo recently spoke at the Africa CEO Summit, on the theme of carbon markets. We spoke to her about tackling sovereign debt to free up adaptation finance, the potential to harness carbon markets in Africa, and her hopes for COP 29 as ‘the finance COP.’

What have you focused on since leaving the Champions?

I’m focused on shaping solutions to deliver quality efficient affordable finance for climate and development in low-income regions, such as Africa. The continent is an emerging powerhouse of climate solutions. While Africans contributed less than three percent to global carbon emissions, we possess a unique set of natural assets; rich biodiversity; abundant arable land; vast renewable energy potential; a rapidly growing skilled workforce; and a vibrant pool of young talent. With these ingredients Africa can become a global climate leader, but first we must urgently unlock finance for adaptation and resilience in the region.

Late last year, I co-authored the ‘Breaking Financing Barriers for a Just Climate Transition in Africa’ paper, with Dr. Mohieldien, the UN Climate Change High-Level Champion for COP 27, and Reuben Wambui, of the Net-Zero Africa Initiative. The paper highlights the persistent challenge of unlocking finance for climate action. Our analysis showed that strained national budgets, unsustainable levels of sovereign debt, intertwined with unsupportive policy frameworks, inconsistent regulation, and low levels of private sector investment have constructed an inefficient, insufficient, and unfair global climate finance system, which must be restructured to realise Africa’s potential.

As a natural extension of this work, I co-chair a project entitled, ‘Debt Relief for a Green and Inclusive Recovery’, with the University of Boston, which aims to advance innovative solutions to address the looming sovereign debt crisis facing low-income countries. 

These are two major areas of focus for me currently.

Why is sovereign debt critical to the climate adaptation emergency?

Sovereign debt is the elephant in the room when it comes to climate adaptation. In the past, colonial powers exploited the resources of regions such as Africa and Latin America, leaving them with limited means to build their economies – locking them out of global markets. To survive, many countries saddled themselves with sovereign debt, beginning a vicious cycle of underdevelopment. Today, historic levels of external debt prevent emerging and developing economies from mobilizing adaptation investment.

Globally, debt obligations to foreign entities have more than doubled since 2008. Debt service payments are at an all-time high; with 2024 due to be the costliest debt service year yet this century. Strikingly, nearly half of the world’s population live in countries that spend more on servicing external debt, than on investments in their own health or education. 

It’s clear that low income countries lack the liquidity and fiscal space to meet historical debts, while investing in critical public services, like health, and education – let alone the costs of climate adaptation, resilience, and mitigation. For example, 9 out of the 10 most climate vulnerable countries are within Africa, yet the continent receives just $30 billion per year for climate adaptation, falling far short of the $277 billion per year which is needed. 

Given the scale of the finance gap, big questions should be asked about the sustainability of debt – especially its role in crowding out investment for development and climate. This issue is becoming even more important as the global search for adaptation and resilience funding intensifies, with more and more countries seeking to respond to increasing climate shocks.

As we speak, Brazil is racing to deliver aid to flood stricken communities in the south. The death toll has reached 146 people, and more than 538,000  people have been displaced. Approaching 12 billion USD in emergency spending has been allocated so far for the rescue phase alone. Now consider the deadly floods in Bangladesh during 2022  more than 100 people were killed, more than seven million people were displaced, without any shelter and in desperate need of aid. The recovery is estimated to have cost a billion USD

Turning to Africa, the continent loses $7 – $15 billion annually due to climate change, which – if the trend continues, is likely to reach $50 billion by 2030, with countries such as Zambia, Malawi and Botswana all currently in drought. The Global Center for Adaptation’s State and Trends in Adaptation report shows that a lack of adaptation financing in Africa will prevent up to six trillion USD of economic benefits being realized by 2035. Conversely, every dollar invested in adaptation yields net economic benefits ranging from $2 to $10, according to The World Resources Institute. 

Is it fair that low-income regions like Bangladesh and Africa must tap into their national budgets to finance their recovery from a climate problem that they did not contribute to? Should they have to pay to defend their populations against future extreme weather events?

To build understanding of the interplay between sovereign debt and developing nations’ capacity to safeguard biodiversity and confront the climate emergency, France, Kenya and Colombia launched an expert review at COP 28. It will shed light on the issue of how debt can become more sustainable, both fiscally and environmentally – an essential step towards upgrading the global financial system to be more equitable and effective in engaging all countries to address the climate crisis.

How can we change the perception of nature-based solutions as ‘uncommercial’?

Most adaptation and resilience projects, especially those concerning nature are not currently seen as ‘bankable’, in the same way as a solar farm, for example, which generates electrons and, in turn, revenue.

The value of a forest as a living carbon sink has, until recently, been overlooked in financial terms. Instead, financial markets have typically evaluated natural resources based on a narrow set of benefits, such as food, materials and energy. The logging industry prioritises immediate profits from extracting timber, over the deeper, long-term climate adaptation, resilience and mitigation benefits of protecting forests. Yet, as the climate crisis intensifies, mindsets are shifting…

For example, in 2018, a three year drought in Cape Town, South Africa drew the city perilously close to its so-called “Day Zero”, when citizens’ taps would literally run dry. In response, The Nature Conservancy (TNC) in Africa (whose board I sit on), and partners introduced the Greater Cape Town Water Fund (GCTWF) – a public private partnership to safeguard the city’s water for its citizens, businesses, and its valuable agricultural sector.

Interestingly, the fund focused on nature-based solutions (NbS) to address the water crisis. For example, thirsty invasive plants, such as acacia, pine and eucalyptus, were absorbing  billions of litres of Cape Town’s water every year. So, the fund created jobs to remove these trees, which also boosted the region’s unique flora and fauna.

Now, municipalities are willing to pay for resources that people need, such as water. So, while the GCTW Fund came from philanthropic origins, it ended up being commercially-funded. Effectively, the need for nature-based solutions to drive resilience converged with the absolute need for water. We can learn a lot from this approach to scaling finance. Nature-based Solutions need initial grant and philanthropic funding, which sets the stage for concessional capital to come in, and then ultimately projects should shift to a commercial footing.

Thankfully, financial institutions are waking up to the fact that nature is a formidable ally in cutting emissions and building resilience, while offering the potential to create hundreds of millions of jobs by 2030 and to unlock more than $10 trillion in business opportunities. Last summer, for example, the Government of Gabon, Bank of America and The Nature Conservancy announced the refinancing of $500 million of sovereign debt, generating $163 million for ocean conservation. This was the first debt for nature conversion in mainland Africa, which supported Gabon’s target to protect 30% of its natural ecosystems by 2030.

That said, commercial value shouldnt be the only dictate for financial flows to adaptation and resilience projects. Companies and institutions need to look beyond their normal financing and net zero projects and consider the impact of their businesses on the broader ecosystem.This is why the recommendations in the Beyond Value Chains Mitigation report by SBTi are important. As it states in the report “BVCM allows companies to support other economic and social actors in reducing or removing greenhouse gas (GHG) emissions, thereby accelerating the global transition to net-zero. This is crucial as it enables the mitigation of emissions beyond a company’s direct value chain, addressing areas commonly underserved by traditional finance mechanisms

Is the need for climate finance landing with leaders in the Global North?

The Summit for a New Global Financing Pact, in Paris last year drove some progress. For example, Senegal secured $2.7 billion from developed countries to invest in renewable energy, and Zambia struck a deal to restructure $6.3 billion in debt. 

However, as the Champions and myself highlighted at the Summit, the hard reality is that it’s more expensive to borrow money for climate action projects in poor countries than it is in wealthy countries. Take solar power: in Ghana the rate of borrowing can be up to five times that in Germany, rendering the cheapest form of electricity out of reach to those that need it most. 

The current expense associated with borrowing money or acquiring financial resources for investment in Africa, is too high and deters investors. In my role as chair of an African bank, we’ve also been grappling with the high cost of mobilizing capital – it’s fiendishly hard to secure external capital for local currency-domiciled projects even for Dollar denominated industrries. 

There is, however, now a growing acceptance that the perceived risk of investing in Africa is higher than the real risk. We need to accelerate the understanding of actual risk, as well as the rewards of doing business in Africa – private investors have major potential to enter the market early and realize significant financial returns and impact for generations to come.

We must also reach a point where the real rate that is associated with debt, or other forms of capital – concessional lending in particular, really speaks to the developmental imperatives associated with that capital. Multilateral Development Banks (MDBs) are increasingly derisking loans into emerging markets. So-called ‘climate clauses’, which provide specific conditions for loan agreements for climate-vulnerable countries, are becoming more commonplace. For example, the World Bank’s newly introduced Climate Resilient Debt Clauses allow countries to focus on disaster recovery instead of debt repayment when climate shocks occur.

Similarly, a key outcome of the recent IMF and World Bank spring meetings was an overhaul of the World Bank’s Guarantee Platform and Livable Planet Fund, which expands the bank’s financing capacity by $70 billion over a decade to tackle climate change, pandemics and other global challenges. With these advances we’re hoping that all Multilateral Development Banks will follow suit to create investor certainty and unleash a wave of private capital for climate and nature projects.

Private climate finance flows represent only 14% of the total funds currently raised. Attracting the private sector to Africa has been hard, partly due to the high cost of capital that’s slowed investment demand. Another perceived challenge was that private capital was struggling to find bankable African climate projects. To overcome this, a pipeline of more than 120 investable, bankable, implementable climate and development projects was identified – dozens of which are in Africa. The projects range from renewables, to water and nature. They are worth around 20 billion USD, which is huge but still a drop in the ocean compared to Africa’s overall climate innovation opportunity – which is estimated to be worth a staggering $2.8 trillion by 2030. 

How can companies support just transition in Africa through their climate commitments and transition plans?

Major global companies act as anchors for clusters of suppliers. Typically, in this model, when the anchor changes it stimulates change across the entire ecosystem. Now that net zero commitments are the norm for publicly-listed firms, there is a massive opportunity for these ‘anchor companies’ to embed supply chain emissions within their targets, creating a ripple effect to suppliers.

A great test case is the Africa Business Leaders Coalition (ABLC), which ahead of COP 27 in 2022, convened Africa’s leading 55 indigenous businesses, representing USD 150 billion and 900,000 African employees. The resulting ABLC Climate Statement, committed these firms to developing robust company resilience plans and building resilience both of their operations – and the communities where they operate, explicitly accounting for climate risk and helping their suppliers to do the same.

In this way, firms within the ABLC are stretching the bubble of what is termed as ‘net zero,’ by actually investing in training and education, nature and healthcare in the pursuit of their targets. To enact a just transition, it’s vital to recognize the connectivity between climate action and development.

What was the vision for the African Carbon Markets Initiative ACMI?

The African Carbon Markets Initiative ACMI originated from a discussion of what projects needed to be scaled in the continent by 2030, which then raised the question of how to unlock more finance for development. We kept returning to the potential for a well-designed carbon market system that would unlock major value.

Over just four months, we partnered with Sustainable Energy for All (SE for All), and the Global Energy Alliance for People and Profit (GEAPP), and the UN Economic Commission for Africa. At COP 27 the ACMI was launched with the vision to build the foundations for a thriving voluntary carbon market ecosystem in Africa by 2030.

Collaboration is an underpinning principle to ACMI, as we are engaging stakeholders from the UN to philanthropies, to energy companies and nature companies and beyond. Our current aspirations for ACMI are to influence new policies that are related to carbon markets, and in particular nature and energy access – through to clean cooking.

How would you respond to the current criticisms of the carbon market?

The current criticism is that carbon markets are giving a “free pass” for heavy emitters, which is a crucial concern which must be addressed through strong governance.

African carbon credit prices are 89% lower than in Europe; it’s clear that higher prices are crucial to avoiding inadvertently subsidizing heavy emitters, as well as ensuring that there’s fairness and good value for communities. Pricing has to be enabling and empowering for communities that are either custodians of natural resources, or clean energy projects. When set at the right level, pricing leads to properly-designed, rigorous projects, which can be a useful tool for achieving net zero, while simultaneously boosting development.

It’s clear that nature is vital to our climate goals – contributing 30 to 40 percent of the sequestration that is needed for net zero – and yet, the carbon accounting phase is often too slow to support early stage products, or inadequate. There’s no doubt that evaluating the carbon credits of a forest is a complex undertaking, taking into account its capacity to mop up greenhouse gases, plus the implementation costs, as well as regulatory uncertainties, and the risk of carbon leakage. 

But, let’s compare the situation with our existing pricing mechanisms for natural assets. What happens if a country discovers a hundred thousand barrels worth of oil? 

A well-established pricing mechanism (based on supply, demand, production costs, and  other geopolitical factors) enables a rapid calculation of its market value. The methodologies for robustly monetising standing forests, for their role in the carbon cycle, urgently needs to catch up with the oil and gas industry.

How can carbon markets work for communities?

As African projects get off the ground, there also needs to be a real focus on their predicted outcomes for communities, and their verifiable ability to deliver carbon removal – not just avoidance. 

An ideal model for carbon offsets is the urgent mission to scale clean cooking in Africa, where four out of five individuals lack access to clean-cooking solutions, which causes pollution-related diseases to impede productivity and human development. Clean cooking is a new solution. It’s beneficial to women who do not have access to clean cooking facilities. There’s a health benefit, but just as importantly it uplifts women and girls – who are often expected to bear the burden of domestic labour. So, clean cooking starts a ripple effect of benefits for communities, beyond just the funding or revenue from the carbon project itself.

What are your hopes for COP 29?

I’m hopeful that adaptation finance will be spotlighted at COP 29, as a fundamental issue. 

At COP 28, the African negotiators, led by Zambia, highlighted that fair and equitable finance for climate adaptation is a matter of life and death for the continent. While a lot of work went into developing the Global Goal on Adaptation framework, ultimately it lacks time-bound quantitative targets and clear means of implementation support. This left many low-income regions frustrated. The focus on finance at COP 29, must include a very firm focus on adaptation finance and the recapitalization of the adaptation fund.

Secondly, COP 29 must strengthen the Loss and Damage Fund to ensure that its implementation doesn’t detract from the implementation of the Adaptation fund, which are not the same – they must be kept separate. There’s a lot more traction around loss and damage, but we must not lose sight of the reality that adaptation and resilience funds are equally paramount. I also believe that due to the current shocks that many regions are facing, the efficiency and effectiveness of the UNFCCC climate funds need to be a priority – many countries are burdened with the need to respond urgently to climate impacts; we need to prevent the reversal of their economic gains.

Thirdly, at COP 28, issues on Article 6 of the Paris Agreement – which sets out the principles for carbon markets – were not concluded, particularly in terms of how countries can cooperate to reach their climate targets through trading greenhouse gas emissions reductions. So, all eyes are on operationalising a crediting mechanism that preserves both environmental integrity, while supporting development.

Lastly, the setting of a New Collective Quantified Goal on Climate Finance (NCQG) is one of the most critical opportunities for the COP, to mobilise trillions of dollars in climate finance that are needed by 2030.

Expanding the donor base is key; there needs to be clear expectations for the role of the private sector in mobilizing capital – keeping in mind that Multilateral Development Banks (MDBs) encounter considerable difficulties in attracting private capital. Despite their concerted efforts, MDBs typically only secure about 60 cents for every dollar of private investment that they allocate​, it therefore is imperative that private capital is brought into the fold early.   And the next round of country climate commitments (NDCs) should be structured to attract finance for climate action. By galvanising the public and private sectors, along with philanthropies and Civil Society, the NCQG can supersede the failed $100 billion Green Climate Fund pledge from rich countries, and give low and mid-income countries the confidence to commit to stronger action on emissions and adaptation.

Overall, I’m really hoping that people actively ‘show up’ for COP 29. In some areas of the market there’s talk that this is ‘only a bridging COP’ – on the way to COP 30. Yes, biodiversity and nature will take centre state at COP 30. However, in order to deliver on those issues we need serious progress on unlocking finance. This makes COP 29 a crucial COP for all of us – as was COP 28, and will be COP 30.

Watch a snipette of her interview below:

Bogolo Joy Kenewendo biography

Bogolo Kenewendo is an economic diplomacy professional whose career spans trade &  investment, finance & development, and public policy. 

Kenewendo served as a Specially Elected Member of Parliament and Cabinet Minister of  Investment, Trade, and Industry in Botswana where she increased investment, improved  Botswana’s business environment, and negotiated key trade agreements. As Special Advisor to the UN Climate Change High-Level Champions, in collaboration with her team and partners, Kenewendo was instrumental in numerous projects including a USD 20 billion UN compendium of climate action projects, the Africa Carbon Market Initiative; and the Africa Climate Risk Insurance Facility for Adaptation. 

Kenewendo serves in various boards including Bank Gaborone, the Africa Free Trade Area Adjustment Fund Corporation and the Africa Center for Economic Transformation. Kenewendo has served the G7 Gender Equality Advisory Council, the UN Secretary-General’s’ High-Level Panel on Digital Cooperation, and the Advisory Group on the Gender Architecture of the UN. 

In 2022, Kenewendo was named among Time Magazine’s ‘TIME100 Next’; as one of the world’s 100 emerging leaders.