Dr. Amani Abou-Zeid is the current African Union (AU) commissioner for Energy and Infrastructure. She believes that cross-border approaches are critical for clean energy affordability. Credit: Aimable Twahirwa/IPS

By Aimable Twahirwa
ABU DHABI, Apr 17 2024 (IPS)

Investors, regulators, researchers, policymakers, and representatives of renewable energy companies, acknowledged the key challenges of shifting away from fossil fuels to renewable energy in Africa when they gathered in Abu Dhabi, United Arab Emirates (UAE) this week.

The latest estimates by the African Development Bank show that Africa’s energy potential, especially renewable energy, is enormous, yet only a fraction of it is currently employed. Official projections indicate that the demand for energy could also be around 30 percent higher than it is today over the next decade on the continent. 

Francesco La Camera, the Director-General of the International Renewable Energy Agency (IRENA) stated that the energy transition is accelerating rapidly, but it clearly remains off track, with an unacceptable uneven distribution of renewable growth that still disproportionately affects the Global South.

“African governments and other stakeholders should adopt innovative solutions to overcome pressing challenges and achieve the energy transition,” La Camera told IPS in an interview.

According to him, there is opportunity [for the continent] to prioritize and narrow down collective actions to overcome the structural and systemic barriers that are impeding progress.

In Africa, experts believe that there are multiple dimensions to energy poverty, which is associated especially with the lack of clear plans and a clear understanding of what the continent wants to achieve.

“Electricity remains the backbone of Africa’s new energy systems, powered increasingly by renewables but a large part of the continent is still left out of the energy transition,” said Bruce Douglas, the Chief Executive Officer at the Global Renewables Alliance, one of the global coalitions of leading industry players committed to accelerating the global transition to renewable energy.

Yet several new commitments were made at the latest UN Climate Change Conference (COP 28) that took place in Dubai, UAE, last year, giving further momentum to the energy transition. Experts are now exploring priorities for the energy transition and immediate steps to ensure that current policies on the continent are improved to encourage greater deployment of renewables.

The latest estimates show that, with Africa accounting for around 39 percent of the world’s renewable energy potential, several renewable energy milestones can be achieved.

“Private and public investment is critical to tackling the multiple dimensions of today’s energy crisis on the continent but to ensure energy security, diversification of various sources is also essential,” Douglas told IPS.

Africa, for example, has abundant hydro, solar, wind, geothermal, hydrogen, and bioenergy resources, but still, the continent’s current energy generation mix continues to rely on fossil fuels, while renewable sources account for nearly 18 percent of the electricity output, it said.

Whereas countries committed on the sidelines of last year’s UN Climate Change Conference to accelerate progress towards tripling renewable power capacity globally to at least 11 terawatts (TW) by 2030, some experts believe that this is still not a long-term solution as more than half of the population still lacks access to electricity.

Amani Abou-Zeid, the Commissioner for Infrastructure and Energy of the African Union Commission (AUC) told IPS that a cross-border approach is critical for participating countries in the transition to clean energy affordability.

“Some countries in Africa have embarked on cross-border projects on clean energies but much more effort is needed to develop really sustainable transitions and adequate instruments,” she said.

The Africa Continental Power System Masterplan, a blueprint currently being developed by the African Union Development Agency (AUDA-NEPAD), highlights some key strategies for countries across the continent to identify key components at national and regional levels that will enable the creation of a smart power systems master plan that promotes access to clean, affordable, reliable, and sustainable electricity supplies across the continent by 2040.

Adja Gueye, Director of Promotion and Cooperation at the National Agency for Renewable Energies in Senegal points out that overall, African countries need appropriate plans at the policy level to overcome some key hurdles on the path to clean energies.

“To facilitate this transition, it would be appropriate for African countries to revise their regulatory framework and move towards harmonization, since the continent needs to improve regional and cross-border electricity interconnections,” she told IPS

Both Gueye and Abou-Zeid are convinced that without infrastructure and appropriate green energies policies and strategies at national and regional levels, it is challenging and impossible to buy and sell electricity across borders.

“Top-down governmental policies and long-term plans on clean energies in Africa are essential,” Abou-Zeid said of the current strategy to establish a long-term continent-wide planning process for power generation and transmission involving all five African power pools.

These include the Central African Power Pool (CAPP), East African Power Pool (EAPP), Northern African power Pool (COMELEC), Southern African Power Pool (SAPP) and Western African Power Pool (WAPP).

Dr. Jimmy Gasore, Rwanda’s Minister of Infrastructure, who is also the current chair of the International Renewable Energy Agency (IRENA) points out that Africa’s climate goals necessitate collective recognition that the energy transition is not just about technological change but also about ensuring equity and justice.

“We need to ensure that the benefits of the energy transition are universally accessible, prioritizing the needs of the most marginalized communities,” he said.

To optimize and diversify green energies on the continent, some experts also stress the importance of encouraging effective cooperation between the private and public sectors in renewable energy and energy efficiency projects.

“To prepare for the current transition to renewable energy, partnerships are essential,” said Gueye of the National Agency for Renewable Energies in Senegal, one of the few dedicated national agencies dealing with clean energies in Africa.

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The link between women in climate change is a cross-cutting issue that deserves greater recognition at climate negotiations. It is pervasive, touching everything; from health and agriculture to sanitation and education.

Women from developing countries witness the nexus between climate change and gender issues on a first-hand basis. They are oftentimes highly dependent on the land and water resources for survival and are left in insecure positions. Climate change is not just an environmental issue, but links to social justice, equity, and human rights, all of which have gender elements.

A female perspective is critical to the success of the 2015 Climate Conference (COP21), which strives to find a global agreement to tackle climate change. In order for it to be effective, it must integrate gender equality, particularly women’s empowerment and gender responsiveness to the vulnerability of rural women.

During the back-and-forth iterations of the climate agreement’s draft, of which several versions were published in the last two weeks, gender was treated as an accessory element that could be removed and bargained with, and all but a handful of parties ignored it. They are wrong.

Asia, the Caribbean, and Africa are three of the most climate vulnerable continents in the world and although they contribute the least to climate change, the women in their countries endure the brunt of its severe impact.

Millions of people in Asia are extremely vulnerable to climate change, especially women because of their traditional, gender-prescribed roles. In many rural areas the mobility of women is very limited, as women working outdoors is often frowned upon due to conservative social perceptions. So while men from climate change-affected areas often migrate to cities and less climate vulnerable regions in search of work, women are left to take care of the homes and children. This confinement to houses translates to economic dependence and lack of access to information such as early warning, which contributes to increasing women’s vulnerability.

Women in Asia usually have more climate sensitive tasks, such as fetching water and preparing food, which increases their vulnerability in the context of climate change. The UN Development Program (UNDP) field research has shown that fetching water involves women and girls commuting over long distances. With the increasing frequency and intensity of floods, women regularly have to navigate through waterlogged areas for fetching water and cooking, which exposes them to the risks of drowning, snakebites, and skin diseases.

Halfway around the globe, women face similar climate-related issues. Caribbean households are largely matriarchal and women find themselves at the frontline of the need for climate adaptation and mitigation.

Women have the prime responsibility of taking care of everyone in the home and are affected by food security and water scarcity. Rural women are particularly vulnerable, especially smallholder producers, marginalised farmers, and agricultural workers living in rural areas.

Whether the food or water shortages are due to the increased amount and intensity of hurricanes or drought, their chances of living decent lives are not high and aren’t getting better. Understanding this point of view is important for successful formulation and execution of climate adaptation strategies.

According to Mildred Crawford, President of the Jamaica Network of Rural Women Producers,” Agriculture needs more visibility in the negotiations. Women are actors in the food chain and need finance to assist small farmers to mitigate and adapt to climate change. Women groups are already organised; so incentives can be given to them to control carbon from waste in their community.”

The Caribbean is in its worst drought in the past five years. According to Mary Robinson, former Prime Minister of Ireland, and also former head of t UN’s High Commission on Human Rights, the climate draft needs to have a sharper gender focus in order to ensure that women have greater access to climate finance, renewable technologies and adaptation capacity. Indeed, climate campaigning should not be narrowed to emissions reductions, carbon trading and transfer of technology, but it should strive to go beyond.

Along with these, it should take note of the fact that most farmers in developing countries are women and therefore adaptation applies strongly to them. Gender applies across the board, it is not something to be used conveniently.
Women from developing countries need to be empowered to play major roles in the climate change fight as they stand to lose so much.

Kalyani Raj, member in charge of All India Women’s Conference, argues that it is crucial to give vulnerable women a voice and include them in policy planning.

“A lot of women have developed micro-level adaptation approaches, indigenous solutions and traditional knowledge that are not being replicated at the macro level,” she said. “So policies should be focused on upscaling these instead of proposing one-size-fits-all measures for climate change adaptation.”

In Africa, the climate change impact on gender issues is mainly linked to agriculture, food security and natural disasters. According to the 2011 Economic Brief of the African Development Bank (AFDB), out of Africa’s 53 countries, women represent 40 percent or more of the agricultural workforce in 46 of them. This sector is characterised as vulnerable because generally it does not comprise formal sector jobs with contracts and income security.

“The poor are especially vulnerable to the effects of climate change, and the majority of the 1.5 billion people living on $1 a day or less are women,” pointed out UNFPA in the 2009 State of World Population report. Furthermore, in a sample of 141 countries over the period 1981–2002, it was found that gender differences in deaths from natural disasters are directly linked to women’s economic and social rights. In inequitable societies, more women than men die from disaster.

As young women from these three vulnerable continents, we are calling for proper representation of women in the climate agreement. The cry of the rural woman is a reality that we must all face. However, we must recognise that women are not just victims, we are powerful agents for change. Therefore, women need to be included in the decision-making processes and allowed to contribute their unique expertise and knowledge to adapt to climate change, because any climate change intervention that excludes women’s perspective and any policy that is gender blind, is destined to fail.

(End)

As thousands of Africans arrive in Europe every month, often risking their lives aboard shaky boats to get to a better life, lack of access to energy could be one of the reasons for their exodus.

Africa’s poverty challenges are well documented. In recent years there has been much discourse around how climate change worsens these challenges and could reverse the continent’s economic fortunes.

Lack of access to energy, for example has been mentioned here at COP 21 as one of the reasons why Africa’s young people leave the continent in search of opportunities, mostly in Europe.

While the International Organisation for Migration outlines that the linkages between human mobility and climate impacts are highly complex, it is critical to point out that, in most situations, people choose or are forced to migrate due to a number of factors and climate change could be the primary one or the key to many secondary factors.

Dr. Akinwumi Adesina, President of the African Development Bank agrees with this reasoning by highlighting lack of electricity in Africa as a reason for young Africans’ mass movement to Europe.

“Droughts all across Africa, the Sahel is burning, Lake Chad is dried-up, livelihoods are devastated, young people across Africa are jumping on boats, jumping to go to Europe because there are no economic opportunities,” Dr. Adesina told IPS at the COP 21 talks in Paris, France.

He says Africa’s lack of access to electricity is stopping the continent’s industrialization, costing Africa up to 4 per cent of its Gross Domestic Product (GDP).

“Africa has no electricity. And therefore, industrialization is not happening, the small and medium enterprises are not functioning at their full capacity. As a result, Africa today loses 3 to 4 per cent of its GDP for lack of electricity,” he said.

Linking his argument to migration, the AfDB President believes lighting-up Africa could transform the continent’s economic fortunes thereby according young people massive opportunities within their own countries.

“It’s also linked to migration by the way…if you turned off this light and it is dark, and you go to an area where there is light, even insects move from where there is dark to where there is light.

“So by lighting up and powering Africa, our young people will be staying on the continent because they can use electricity to do many things. Nobody works in the dark and succeeds, you walk in the dark you always stumble, you fall, that’s why we must light up and power Africa,” he said of the Africa Renewable Energy Initiative which was launched at the COP 21 talks, targeting 10 gigawatts in the next five years and 300 gigawatts by 2030.

This massive initiative dubbed Africa’s commitment to an ambitious outcome of the COP 21 climate deal will require billions of dollars to materialize.

Juxtaposing Europe’s migrant crisis that is set to cost as much as 5 billion dollars, and the cost of climate financing for Africa, there could be an opportunity for longer term investment in Europe addressing the migrant problem at its source.

Niclas Hällström, Director of What Next, a Swedish think-tank, says the renewable energy initiative provides an opportunity for Europe to make serious investments in its own interest.

“It is a moral imperative for developed countries to support Africa’s climate adaptation, but it is also in their interest.

“Take the newly launched Africa Renewable Energy Initiative. This bold effort by African countries is set to reach universal access for all Africans by latest 2030…It requires billions of dollars in climate finance, but will create jobs and enhanced well-being for people across the whole continent. Apart from the need to handle the refugee situations acutely, this is the best longer-term action one can think of,” said Hällström.

Climate finance has remained a sticking point in the climate negotiations for years. With few days to go before the end of COP 21, the trend has not changed much.

Dan Bodansky, Foundation Professor of Law and Faculty, Co-Director of the Center for Law and Global Affairs at the Sandra Day O’Connor College of Law at Arizona State University, shares insights on day 8 of the negotiations.

“Of the ‘crunch issues,’ finance is the most difficult…unlike the other issues, it may not be possible to paper over through artful wording, although the use of terms like “should” and “strive” may provide a middle ground,” he said, pointing out that the negotiating text that emerged from the ADP over the weekend still has many other brackets and options.

As negotiations enter the final frenzy hours with the text expected on Day 9, the African Group of Negotiators and other key stakeholders’ anxiety is reaching tipping points.

“The present reality at the conference confirms that countries have spent the first week restating their old positions leaving most of the key debates unresolved,” said Sam Ogallah of the Pan-African Climate Justice Alliance (PACJA), calling on Ministers to urgently inject energy into the process for a fair deal that would reflect the principle of Common But Differentiated Responsibility-CBDR and addresses the issues of loss and damage, finance for adaptation and mitigation and keeping the global warming well below 1.5 Celsius.

In adding impetus to the climate change and migration nexus, a report released by the International Fund for Agricultural Development (IFAD) at the COP 21 Talks, accuses world’s top media of failing to identify climate change as a contributor to some of the world’s biggest crises, including migration, food insecurity and conflict.

IFAD President, Kanayo Nwanze, said “If the world becomes aware of how climate change threatens our food security or why it is a catalyst for migration and conflict, then we can expect better support for policies and investments that can pre-empt future crises.”

Will developed countries at COP 21 recognise this argument? The world will know in a matter of hours.

(End)

A famous saying goes: To whom much is given, much is expected. This is the message that the African Development Bank (AfDB) is carrying and delivering for, and on behalf of Africa at the global conference on climate change, COP21, which opened Monday, 30th November.

“All fingers are not equal. Those who pollute more should do more in saving our planet,” said AfDB President, Dr. Akinwumi Adesina, who is leading his bank’s team at the climate change conference in Paris.

Adesina, a former Minister of Agriculture in Nigeria, knows what climate change has done and what its implications are for Africa’s agricultural development if nothing is done to halt global warming.

“The danger that Africa will not be able to feed itself is a real one. And if we don’t have resources to adapt to climate change, Africa will not be able to unlock potential in agriculture,” said Adesina, highlighting the implications of climate change variability on Africa’s agricultural transformation agenda.

He says the bank’s message at the COP 21 was clear: a new climate deal that does not work for Africa is no deal at all.

According to Dr. Adesina, the major and historic polluters must take a fair share of responsibility not only to cut their emissions but also help the suffering adapt to climate impacts.

The AfDB’s stance resonates with a long standing position of the African Group of Negotiators (AGN)which has been pushing for a common but differentiated principle demanding historic emitters to cut emissions to keep warming below 1.5 degrees celsius and provide funding for adaptation for vulnerable countries, most of which are in Africa.

With impacts ranging from droughts and floods affecting agricultural production and water availability in the southern and Sahel regions of Africa, to shrinking rivers, a classic example being Lake Chad, African countries are hoping for a climate deal that would address these challenges both in the short and long term.

“Adaptation as you know is key for Africa but this time we are demanding a high level of adaptation equal to mitigation because we know that the two are closely linked,” Chair of the African Group of Negotiators Nagmeldin Elhassan told a high level panel discussion at the on-going climate talks in Paris.

Nagmeldin said African heads of state are expecting nothing short of a fair and just deal for the continent, a victim of circumstances it never caused.

He said adaptation would be a key issue at the COP 21 negotiating table for Africa as over the years, the African Group of Negotiators has been seeking for parity between mitigation, adaptation and provisions for enhancing means of implementation, noting the increased burden for adaptation in developing countries.

“When we speak adaptation, we link it to means of implementation as a way of getting developed countries involved to provide support,” the AGN chair said.

And the African Union Commissioner for Rural Economy and Agriculture, Rhoda Peace Tumutsime puts it categorically that, “Unless we get a good deal here, that will help with the right technology, we will not be able to modernize and transform agriculture.”

The question of means of implementation is a critical component of this year’s COP. According the African Climate Policy Centre (ACPC) of the United Nations Economic Commission for Africa-(UNECA), climate change could stimulate developing economies into adapting sustainable development paths, through entrepreneurial opportunities, and spaces for policy makers to address equity concerns in gender and youth policies.

Dr. Carlos Lopez of UNECA argues Africa’s possible positive outcome from danger. “Despite all the negative news that is reported about Africa, there are opportunities that we can take advantage of. It is very important to get the perceptions right about Africa’s challenges and available opportunities. In all the bad news are potential areas for growth,” he said.

Dr Lopez said Africa has a massive advantage to develop differently by embracing the opportunities that climate change offers to develop sustainably.

“It is also important for us to realize that we are not going to make it using the same carbon intensive model…let’s take for example, under the 2063 agenda we have to create 122 million jobs. Following the carbon path, we will only create 54 million jobs, but what about the deficit?” he asked.

Citing various examples of opportunities among which is renewable energy owing to Africa’s natural potential of solar, the UNECA Chief is more than convinced that the continent should be part of the solution and “achieve industrialization which is cleaner, greener, without following the carbon model.”

However, the question of resources still remains. Will the climate deal offer Africa this opportunity? The next week or so will decide what and which way forward.

(End)

Nteranya Sanginga, Director General of the International Institute of Tropical Agriculture (IITA). Courtesy of IITA

By Nteranya Sanginga
IBADAN, Nigeria, Nov 23 2015 (IPS)

Finding a way to allow youth to contribute their natural and ample energies to productive causes is increasingly the touchstone issue that will determine future prosperity.

It is a tragic irony that today’s youth, despite being the most educated generation ever, struggle to be included.

That’s true in advanced countries. But it is even more true in Africa, where almost two-thirds of the jobless are young adults, whose ranks swell by 10 to 12 million new members each year. The challenge is staggering in scale: Today there are 365 million Africans aged 15 to 35, and over the next 20 years that figure will double.

There is no magic wand. It is youth themselves who must find a solution.

Everyone else – governments, international organizations, the private sector, social groups and parents – has a huge stake in their success and so must not stand in the way. Normally one hears about the need to help cast in elaborate theories based on the need for redistribution. But the truth is, we need a step change.

That’s the spirit the International Institute of Tropical Agriculture (IITA) is adopting with our “agripreneur” coaching programmes. These aim to use self-help groups so that people can indeed help themselves. As I bluntly told a group of youth in Uganda, we will provide support in the form of technology, knowledge and advocacy, but the real activity has to be done by themselves. Another message was: “be aggressive.”

It is well known that Africa is a vast land of family farmers, many living in rural areas and regularly struggling with poverty and hunger. Figures can also be easily made to show how most family farms are exercises in subsistence, and don’t always succeed without external help.

Family farming is a way of life, to be sure. But that does not mean, when you really think about it, that it cannot be done as a business. Doing so would represent a change, but the time has come. Making agriculture a commercial trade offers a set of new tools to entice talented youth to a sector we all know they tend to run away from.

As Akinwumi Adesina, formerly Nigeria’s agriculture minister and now the president of the African Development Bank, likes to say, “Africa’s future millionaires and billionaires will make their money from agriculture.”

And it is quite likely that youth, being in a proverbial rush, will accelerate the transformations that will lead to better lives than a mad rush to cities where employment prospects aren’t keeping pace with urban population. Moreover, agriculture has been the weak link in terms of productivity growth across the continent – that means there is an enormous upside to doing it better.

Knowledge needs pollinators. While extension services are excellent and should be upgraded, young people are natural communicators when they think something is cool and useful. That’s what agriculture has to be.

IITA’s agripreneur campaign hinges on our version of a Silicon Valley hackathon. Incubators are created to allow youth to learn and exchange ideas of a practical nature – about how to keep accounts, new crops and farming techniques, the myriad possibilities of agricultural value chains that include roles for seed traders, food processors, weather forecasters, insurance salespeople, marketing specialists.

One of our agripreneur “interns” told me that what he took away was that success is not in fact all down to money. An enterprise really needs ideas, of course, and the ability to plan.

To be clear, his enthusiasm – as so many of our alumni say – was about the possibility of enterprise. Call it agribusiness. Agricultural commodity value chains provide just that, a series of transactional opportunities that work to improve efficiency for all and reward the talented. This is a major catalyst for youth. After all, it opens the door for the professionalization of agriculture.

To be sure, the agribusiness model crucially requires inclusive efforts to make sure credit is available to youth, to assure that gender equity becomes an operational assumption rather than just a goal, and a host of public goods including scientific research. Yet it begins with a changed mind set.

People must learn how to apply for a loan. Bankers always say they wish to fund on the basis of a business plan rather than collateral. It is time to put that to the test. IITA’s focus on agripreneurs is a well-placed bet on the idea that nobody learns faster than youth.

(End)

Excerpt:

By Roberto Azevêdo
GENEVA, May 2 2015 (IPS)

Up to 80 percent of global trade is supported by some form of financing or credit insurance. Yet in many countries there is a lack of capacity in the financial sector to support trade, and also a lack of access to the international financial system. Therefore the ability of these countries to use simple instruments such as letters of credit is limited.

The impact of these limitations on a country’s trading potential can be very, very significant.

WTO Director-General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

After the financial crisis, the supply of trade finance has largely returned to normal levels in the major markets, but not everywhere and not for everyone.

The structural difficulties of poor countries in accessing trade finance have not disappeared – indeed the situation may well have declined due to the effects of the crisis.

There are indications that markets are even more selective now. Under increased regulatory scrutiny, many institutions have lowered their risk-appetites and are focusing more on their established customers. Some are deliberately decreasing their number of clients in a so-called “flight to quality”.

In this environment, the lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most.

I was particularly struck by the fact that the financing gaps are the highest in the poorest countries, notably in Africa and Asia. And I was struck by the size of those gaps.

A survey by the African Development Bank of 300 banks operating in 45 African countries found that the market for trade finance was somewhere between 330 and 350 billion dollars.

It also found that this could be markedly higher if a significant share of the financing requested by traders had not been rejected.“The lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most”

Based on such rejections, the estimate for the value of unmet demand for trade finance in Africa is between 110 and 120 billion dollars.

This gap represents one-third of the existing market.

The main reasons for the rejection of requests for financing were:

• the lack of creditworthiness or poor credit history
• the insufficient limits granted by endorsing banks to local African issuing banks
• the small size of the balance sheets of African banks, and
• insufficient U.S. dollar liquidity

Some of these constraints are structural, and can only be addressed in the medium to long term. The retreat of global banks from Africa, and from other poor countries, is one such issue.

The Asian Development Bank conducted a similar survey in Asia, looking at countries like Viet Nam, Cambodia, Bangladesh, Pakistan and India.

According to preliminary estimates, the unmet demand there is around 800 billion dollars.

Small and medium-sized enterprises are the most credit-constrained as 50 percent of their requests for trade finance are estimated to be rejected. This is compared with just seven percent for multinational corporations.

Moreover, two-thirds of the companies surveyed reported that they did not seek alternatives for rejected transactions.

Therefore, these gaps may be exacerbated by a lack of awareness and familiarity among companies – particularly smaller ones – about the many options which exist.

A large majority of firms stated that they would benefit from greater financial education.

These findings are particularly striking as Africa and developing Asia are two areas of the world in which trade has grown fastest in the past decade.

But the potential evolution of new production networks is faster than the ability of the local financial sectors to support them.

In this way the lack of development of the financial sector can be a significant barrier to trade.

It can prevent developing countries from integrating into the trading system and accessing further trade opportunities.

And it can therefore prevent them from leveraging trade as a powerful source of development.

So we need to respond to this problem.

The exchanges that we have here can form part of this response. We need to join together in order to advocate action in this area and to devise practical solutions.

Of course, there is no magic bullet. This is a complex issue. However, that should not discourage our efforts.

The trade finance facilitation programmes that I outlined earlier are one example of practical action that we can take.

Of course this only fills part of the gap, so our response needs to be more fundamental.

In July this year, the United Nations’ major ‘Financing for Development’ conference will take place in Addis Ababa. And I think it is essential that we put trade finance on the agenda there.

In this way we can ensure that this issue is given its proper prominence in the development debate, especially at a time when the all-important U.N. Sustainable Development Goals are being finalised.

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Kinda Mohamadieh
GENEVA, Apr 6 2015 (IPS)

The world’s attention turned to the practices of vulture funds after the U.S. Supreme Court affirmed a lower court opinion in the NML Capital vs Argentina case, which forbids the country from making payments on its restructured debt.

Argentina had defaulted in 2001 and went through two rounds of negotiations to restructure its debt, both in 2005 and 2010. In June 2014, the court ordered Argentina to pay the ‘vulture funds’ that held out and did not accept the terms of the debt swaps.

Kinda Mohamadieh

The vulture funds had held out with the aim of achieving what amounts to a 1,600 percent return on their original investment. The funds concerned had purchased the Argentinian bonds in 2008 at 48 million dollars and the court ruling ordered Argentina to pay them 832 million dollars.

Nobel laureate Joseph Stiglitz noted that this was “the first time in history that a country was willing and able to pay its creditors, but was blocked by a judge from doing so”.

While this case brought the term ‘vulture funds’ into the public sphere, the predatory practices of these entities did not start with Argentina.

According to a former U.N. independent expert on the effects of foreign debt and other related financial obligations of states on the full enjoyment of all human rights, the term ‘vulture funds’ describes “private commercial entities that acquire, either by purchase, assignments or some other form of transaction, defaulted or distressed debts, and sometimes actual court judgments, with the aim of achieving higher returns.”

Basically, vulture funds are hedge funds whose modus operandi focuses on three main steps including: (1) purchasing distressed debt on the secondary market at deep discounts far less than its face value; (2) refusing to participate in restructuring agreements with the indebted state; and (3) pursuing full value of the debt often at face value plus interest, arrears and penalties, including through litigation, seizure of assets or penalties.“The African Development Bank has reported that at least twenty heavily indebted poor countries have been threatened with or have been subjected to legal actions by commercial creditors and vulture funds since 1999”

Many developing countries have been exposed to the predatory practices of vulture funds, especially African and Latin American countries.

The African Development Bank has reported that at least twenty heavily indebted poor countries have been threatened with or have been subjected to legal actions by commercial creditors and vulture funds since 1999. These countries include Sierra Leone, Cote d’Ivoire, Burkina Faso, as well as Angola, Cameroon, Congo, Democratic Republic of the Congo, Ethiopia, Liberia, Madagascar, Mozambique, Niger, Sao Tome and Principe, Tanzania, and Uganda.

Peru was targeted by NML Capital in the year 2000. According to media reports, the fund spent almost four years in the courts to win a ruling that forced Peru to settle for almost 56 million dollars on distressed debt, which the fund had initially bought for 11.8 million dollars.

The African Development Bank has documented that up until the year 2007, 25 judgments in favour of vulture funds had yielded nearly one billion dollars. Out of this amount, 72 percent of the judgments have been against African countries. The reported number of outstanding cases against debtor countries has doubled since 2004.

According to the World Bank and the International Monetary Fund (IMF), 54 court cases were instituted against 12 heavily indebted poor countries between 1998 and 2008. The IMF estimates that in some cases claims by vulture funds constitute as much as 12 to 13 percent of a country’s gross domestic product.  The World Bank estimates that nearly one-third of countries that are eligible for debt relief and other poverty alleviation programmes are the targets of nearly 26 vulture funds.

Concerned about the extent of the threat posed by such predatory practices and their systemic implications, several international authorities and multilateral institutions have voiced their concern about the matter.

The African Development Bank has warned that by precluding debt relief and costing millions in legal expenses, these vulture funds undermine the development of the most vulnerable African countries.

In June 2014, the heads of state and government of the Group of 77 and China, in their declaration issued on the occasion of the ‘For a New World Order for Living Well’ summit held in Santa Cruz de la Sierra, Bolivia, reiterated the importance of “not allowing vulture funds to paralyse the debt restructuring efforts of developing countries” and stressed that “these funds should not supersede the state’s right to protect its people under international law.”

The IMF had cautioned that upholding the decision against Argentina would harm future sovereign debt restructuring attempts. In 2013, the IMF stated that “if upheld, [the Court of Appeals decision] would likely give hold-out creditors greater leverage and make the debt restructuring process more complicated”.

In 2007, G8 finance ministers had expressed concern about actions of some litigating creditors against heavily indebted poor countries, and agreed to work together to identify measures to tackle this problem based on the work of the Paris Club.

In September 2014, a resolution on the activities of vulture funds and the effects of foreign debt and other related international financial obligations of states on the full enjoyment of all human rights, particularly economic, social and cultural rights, was presented by Argentina and adopted at the 27^th session of the U.N. Human Rights Council which took place in Geneva.

It is also worth noting that the 26^th session of the Human Rights Council in June 2014 had adopted a resolution titled ‘Elaboration of an international legally binding instrument on Transnational Corporations and Other Business Enterprises with Respect to Human Rights’.

This resolution sets in place a process of negotiations towards an international legally binding instrument on transnational corporations and their liability in the area of human rights. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

* This column is based on a longer version published in published in the South Centre’s South Bulletin 83 of 12 February 2015.

Excerpt:

Choosing the right options for less-polluting energy sources is a vital question – in which energy-starved Africa has a keen interest. Credit: Bigstock

By Mantoe Phakathi
WARSAW, Nov 22 2013 (IPS)

Power generation is a major contributor to the greenhouse gas emissions that cause global warming. Choosing the right options for less-polluting energy sources in the future is a vital question – in which energy-starved Africa has a keen interest.

In one camp, highly polluting industries are appealing for support under any new climate finance mechanisms established under the United Nations Framework Convention on Climate Change process.

Coal is all but synonymous with greenhouse gas emissions, yet the industry says it believes it has a place in a low-carbon future. The World Coal Association’s chief executive officer, Milton Catelin, said low-emission coal technologies, which are already available in the market, could help the industry reduce emissions by 20 percent.

“This is equivalent to the carbon dioxide emissions of India,” said Catelin.

According to Godfrey Gomwe, the chief executive officer of Anglo American, one of the world’s largest world mining and natural resources firms, the coal industry needs to develop better clean technologies to reduce greenhouse gas emissions.

But who will pay the costs of this research and development? Development banks that could finance this are shying away from such projects, Gomwe told the Coal Summit, held on Nov. 19 on the sidelines of the U.N. Climate Conference.

“Coal’s role is likely to grow in many places, regardless of whether development banks are involved or not,” he said.

“The danger in forcing the industry to fund the development of technologies for cleaner-burning coal power,” he told the industry executives, policy makers and representatives of multilateral and environmental organisations in attendance, “is that that it would come up with cheaper, but less effective projects.”

The WCA says that 41 percent of electricity generation worldwide comes from burning coal. While admitting that the coal industry was responsible for a significant proportion of total greenhouse gas emissions, Gomwe said it was wishful thinking to imagine coal would simply disappear as demand for power doubles over the next three decades.

The argument in favour of helping polluting industries clean up their act is hitting home for some. The first executive director of the Green Climate Fund, Héla Cheikhrouhou, said the Fund would include a “private sector facility” which will focus on funding businesses to develop cleaner technologies.

Funding for the GCF, the new multinational fund created to manage the money pledged towards long-term climate finance for the developing world – the target is 100 billion dollars a year by 2020 – remains uncertain.

Many civil society organisations flatly reject the idea of climate finance for the very industries whose emissions are responsible for creating the climate crisis in the first place.

“The notion of clean coal is as false as the notion of clean cigarettes,” Greenpeace International executive director Kumi Naidoo told IPS.

He said the coal industry is promoting technologies such as “clean carbon and storage” as though it already exists, when in fact it will take decades for the industry to develop these innovations into effective techniques for commercial use.

He wondered why governments would invest in something that might ultimately be impossible to achieve when there is evidence that renewable energy sources can provide sufficient energy.

“It is a myth that renewable energy sources are insufficient. There is evidence that in Africa alone, we haven’t even tapped into one percent of renewable energy sources,” said Naidoo.

Mark Lutes, the Climate Finance Policy coordinator for the World Wide Fund for Nature, agreed that instead of investing in so-called clean technologies for coal, more funding should go to research and innovations in renewable energy.

“In fact, there are no technologies that can eliminate emissions, they can only be reduced,” Lutes told IPS. “Renewable sources of energy are clean. It’s just that they are marginalised in favour of fossil fuels.”

Governments of poor countries are also calling for investment in renewable energies as opposed to supporting polluting conglomerates to continue burning coal.

The manager for environmental safeguards and compliance at the African Development Bank, Anthony Nyong, agreed that renewable energy sources are not given enough attention.

He said Africa needs a lot of energy to drive its development but the continent lacks access to clean technologies that would allow the sector to grow sustainably.

“Take solar energy, for instance. Africa has the sun in abundance and could be generating a lot of energy from this source if there was a lot of research and innovation going into this sector from within the continent,” said Nyong.

Addressing the Coal Summit, UNFCCC executive secretary Christiana Figueres also urged the industry to diversify its portfolio beyond coal.

“Some major oil, gas and energy technology companies are already investing in renewable and I urge those of you who have not yet started to do this to join them,” said Figueres.

She said the coal industry has the opportunity to be part of the worldwide climate solution by responding proactively to the current paradigm shift.

Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. In resource-rich countries, the natural resource sector is usually the main source of illicit financial flows. Credit: Tommy Trenchard/IPS

By Carey L. Biron
WASHINGTON, May 28 2013 (IPS)

Over the past three decades, Africa has functioned as a “net creditor” to the rest of the world, the result of a cumulative outflow of nearly a trillion and a half dollars from the continent.

The new data, to be formally released Wednesday by the African Development Bank (AfDB) and Global Financial Integrity, a Washington-based watchdog group, stands in stark contrast to widely held images of Africa receiving massive amounts of foreign aid."While these figures are amazing, we have to recognise that they’re being directly facilitated by Western banks and tax havens." -- GFI's Clark Gascoigne

Foreign assistance levels are indeed high for Africa – following on a 2005 pledge among the Group of Eight (G8) rich countries, the continent receives more than 50 billion dollars a year, making it the world’s most aid-dependent region. Yet according to the new joint report, the interplay of corruption, tax evasion, criminal activities and other factors resulted in a net outflow of some 1.4 billion dollars between 1980 and 2009.

“In development circles we talk a lot about how much aid is going to Africa, and there’s this feeling among some in the West that after we’ve been giving this money for decades, it’s Africa’s fault if the continent’s countries still haven’t developed,” Clark Gascoigne, communications director at Global Financial Integrity (GFI), told IPS.

“In fact, our research shows that while the West has been giving money to Africa, far more is flowing out illicitly. Further, you can assume that illicit outflows from other regions would likely lead to high net resource transfers from other developing regions, as well.”

In Africa, this trend appears to have particularly strengthened over the past decade, during which time some 30.4 billion dollars every year are thought to have illegally leaked from the continent. Of that, around 83 percent is thought to have come from North African countries alone.

Over the full three decades, perhaps counter-intuitively, dark-money outflows appear to have originated particularly in resource-rich countries, those most prominently engaged in oil, gas and other natural resource extraction. Some of the most notable include Nigeria, Libya, South Africa and Angola.

Such findings are bolstered by a new index, released last week by the Revenue Watch Institute (RWI), another watchdog group, that for the first time systematically correlated governments’ economic dependency on natural resources and low human development indicators.

The RWI index looked at 58 countries responsible for the vast majority of the world’s petroleum, copper and diamond extraction, and reported that the profits of their extractive sectors added up to more than 2.6 trillion dollars in 2010, far outweighing Western aid flows. Yet more than 80 percent of those countries had also failed to put in place satisfactory standards for openness in these sectors – and half hadn’t even taken basic steps in this regard.

“In resource-rich countries, the natural resource sector is usually the main source of illicit financial flows,” the AfDB-GFI study states, noting a finding by the International Monetary Fund (IMF) that Angola’s oil sector in 2002 failed to report around four billion dollars.

“These countries generally lack the good governance structures that would enable citizens to monitor the amount and use of revenues from the natural resource sector. Often, rents and royalties derived from resource management are not used to support the social and economic development of resource-rich countries but instead are embezzled or expended in unproductive ways through corruption and cronyism.”

The impacts of this mass leakage on both African public coffers and foreign development-focused aid are clear.

“The resource drain from Africa over the last 30 years – almost equivalent to Africa’s current gross domestic product – is holding back Africa’s lift-off,” Mthuli Ncube, chief economist and vice-president of the African Development Bank, said Tuesday.

“[But] the African continent is resource-rich. With good resource husbandry, Africa could be in a position to finance much of its own development.”

Halting “absorption”

The new report, which is being released Wednesday at the African Development Bank annual meetings in Morocco, does not look into country-specific drivers of these outflows.

Yet while it is clear that differing levels of strengthening of country-level regulatory mechanisms will be required to ensure that natural resource development in Africa benefits public sector aims, it is impossible to ignore the role of Western countries in this ongoing situation.

“While these figures are amazing, we have to recognise that they’re being directly facilitated by Western banks and tax havens that allow for the creation of anonymous shell companies, by Western governments that don’t share tax information and continue to lack adequate money-laundering enforcement,” GFI’s Gascoigne says.

“While the onus for change is on both national and international players alike, the Western countries can control the international component of this dynamic – the international financial structure.”

The AfDB and GFI analysts are encouraging strengthened alignment of financial policies between African countries and those countries that are “absorbing” these illicit flows. The United States, for instance, continues to be the largest incorporator of shell companies in the world, while Gascoigne says there is also far more that Washington and other Western capitals can do on swapping tax information and refusing to tolerate bank and tax haven secrecy.

In this regard, many observers are eagerly awaiting the G8 summit slated to be held in the United Kingdom in mid-June. The first part of this year has seen unique international momentum build around issues of tax evasion and tax havens, energised particularly by depleted government coffers in the aftermath of the global economic crisis.

British Prime Minister David Cameron, who is hosting the upcoming summit, has taken on the issue of tax evasion as a key priority for his government’s G8 presidency this coming year. He has been widely praised for his recent leadership on the issue, particularly for pushing a new global standard under which governments would automatically share tax information.

European Union countries have now largely aligned themselves with the U.K. stance. But key to watch at the June summit will be whether the United States, Canada, Japan and Russia agree to sign on to a robust new initiative – or choose instead to stand in the way of greater reform.

“Curtailing these outflows should be paramount to policymakers in Africa and in the West because they drive and are, in turn, driven by a poor business climate and poor overall governance, both of which hamper economic growth,” GFI chief economist Dev Kar, formerly with the IMF, said Tuesday.

“The slower growth rate results in more aid dependency, with foreign taxpayer funds filling the shortfall in domestic revenue – to the extent that tax evasion is a part of illicit flows.”