Explainer: What options do African nations have to finance climate, nature?

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At the African Climate Summit this week, national leaders meet to discuss how to fund the challenges posed by climate change and biodiversity loss.

Below are some of the various ways in which countries can finance protection of their natural resources - and the potential hurdles to scaling them quickly:Top multilateral development banks such as the World Bank, European Investment Bank and African Development Bank are funnelling increasing amounts of money into renewable energy and other sustainable finance projects in Africa, but their efforts need to increase massively.

More than 800 million people are now classed as food insecure. The African Development Bank estimates that loss and damage costs due to climate change in its region are between $289.2 billion to $440.5 billion and that an 1°C increase in temperature is also associated with a greater probability of conflict in the region of approximately 11%.

The countries hope demand for carbon offsets - credits for emissions-reducing activity that can be generated through projects such as tree planting - will increase as companies with net-zero goals buy them to cancel out emissions elsewhere. Clean cookstove projects are also popular in Africa which generate carbon credits by substituting a polluting cooking method for one with lower emissions.

At their simplest, debt-for-nature swaps are when a country's government bonds or loans are bought up by a bank or specialist investor and replaced with cheaper ones, usually with the help of a multilateral development bank 'credit guarantee'.

 

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