Financiers See Opportunities in COVID-19 and Climate Challenges for Africa’s Transformation

Despite the adverse impacts of extreme weather conditions due to the climate crisis, the experts concluded that Africa holds significant potential to build resilient and successful economies.

African financiers have highlighted how the COVID-19 pandemic and the ongoing climate crisis have created unique opportunities to transform the continent's economies. This discussion took place at an event organized by Moody’s, the global credit rating agency, on the sidelines of the Africa Development Bank Annual Meetings in Nairobi.

Despite the adverse impacts of extreme weather conditions due to the climate crisis, the experts concluded that Africa holds significant potential to build resilient and successful economies.

The island of Mauritius faces risks from rising sea levels and has recently experienced flash floods affecting its coastal regions. Harvesh Seegolam, the Governor of the Bank of Mauritius, detailed the island's rapid implementation of a climate mitigation and adaptation strategy.

“Although Mauritius has contributed only about 0.01% of global greenhouse gas emissions, we are among the world's most vulnerable to the climate crisis. We need $7.6 billion for our strategy to succeed, with 36% financed by our government. The rest will require private sector and external funding,” Seegolam stated.

Seegolam emphasized the importance of making Mauritius attractive to private and international investors to finance bankable climate projects. The island has issued Green and Blue Bonds and established key enablers to enhance its investment appeal.

“We need good governance and ease of doing business to attract global investors. African countries must share best practices and discuss how to enhance our collective efforts. The pandemic provided an opportunity to rethink and restructure our economy, and now we are reaping the benefits,” he added.

Professor Robert Mudida, Head of Research at the Central Bank of Kenya, shared similar experiences. Kenya has faced extreme weather events, including floods, droughts, and mudslides.

“Kenyan agriculture grew by 7% this year, but we experienced the worst drought since the 1990s in the two previous years. Climate finance is key to our transformation, which is why Kenya has incorporated climate-related risks into our financial models. We need to address these issues as part of global financial transformation,” Mudida said.

Mudida highlighted the importance of public-private partnerships in attracting investors and developing an export-driven economy. Currently, Kenya exports around 40% of its goods and services and aims to strengthen its global export presence. Small and medium-sized enterprises (SMEs) are critical to achieving this growth agenda.

The event was hosted by Moody’s Vice President David Roderick. Moody’s Analytics has a long-standing role in providing credit risk solutions to Africa, publishing credit ratings, and offering assessment services for various debt obligations. Moody’s remains cautiously optimistic about emerging markets, with expectations of GDP growth and slowing inflation.

Moody’s Analyst Lucie Villa described Africa’s transformation as both a challenge and an opportunity. She emphasized that climate resilience and inclusive growth could enable Africa to build resilient economies in 2024.

“It’s important to review what has worked well. Policy coordination between central banks and Finance Ministers is crucial so that when the next shock comes, Africa is better prepared,” Villa concluded.