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Nigeria, Egypt, S’Africa, other developing economies need $2tn annually to achieve net-zero emissions— IMF

Published

1 year ago

October 3, 2023

The International Monetary Fund (IMF) stated in a report released on Monday that emerging economies, some of which are African countries, would require about $2 trillion per year by 2030 to meet the target of net-zero emissions by 2050.

An emerging economy is a market that has some characteristics of a developed market but does not fully meet its standards; African countries like Nigeria, Egypt, South Africa, and Kenya are in this category.

The report “Emerging economies need much more private financing for climate transition”, pointed out that investing significantly in climate mitigation in emerging markets and developing economies, which currently emit about two-thirds of greenhouse gases, was necessary to achieve the transition to net-zero emissions by 2050.

The report read in part:

“These countries will need about $2tn annually by 2030 to reach that ambitious goal, according to the International Energy Agency, with the majority of that funding flowing into the energy industry. This is a fivefold increase from the current $400bn of climate investments planned over the next seven years.

“We project that growth in public investment, however, will be limited and that the private sector will therefore need to make a major contribution toward the large climate investment needs for emerging market and developing economies.

“The private sector will need to supply about 80 per cent of the required investment, and this share rises to 90 per cent when China is excluded, as shown in an analytical chapter of our latest Global Financial Stability Report.”

Additionally, the report asserts that while China and other larger emerging economies have the necessary domestic financial resources, many other nations lack sufficiently mature financial markets that can provide significant amounts of private finance.

Phasing out coal power plants, the single largest source of global greenhouse gas emissions (about 20%), is another major challenge.

Meanwhile, some pan-African arguments have emerged in reaction to the calls to phase out existing energy sources, seeing it as a conspiracy against the continent’s use of energy for development after the sources had been adequately explored for developed economies.

Related Topics:Africa Featured IMF Net-zero emissions

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IMF mission concludes 4th loan program assessment in Egypt

Published

1 day ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.