Africa Climate Summit: African Leaders Propose Use Of Single Currency To Address Sustainability Action

• Ghana’s State Minister of Finance Mohammed Adam who spoke at the Africa Climate Summit emphasised the need for Africa to utilise its own currency in trade
• Barbara Creecy, the Minister of Environment, Forestry, and Fisheries from South Africa, drew attention to the critical issue of climate finance for Africa
• On her part, Kenya’s Environment Cabinet Secretary Soipan Tuya emphasised the need to address Africa's debt burden in the context of climate action

Nairobi - As the inaugural Africa Climate Summit (ACS) kicked off at the Kenyatta International Conference Centre (KICC), calls for the adaptation of a common trade currency dominated the talks.

This, the leaders observed would help address climate finance gaps on the African continent.

Speaker after speaker said that a single currency could stimulate economic growth, enhance access to capital markets, and reduce risks for international investors, all while promoting regional cooperation.

Speaking during the ministerial panel discussion, Ghana’s State Minister of Finance Mohammed Adam emphasised the need for Africa to utilise its own currency in trade and leverage private sector funds to complement public finance in responding to the climate crisis.

"With a single currency, intra-African trade would become more efficient, reducing trade barriers and transaction costs. This would stimulate economic growth and create additional fiscal space for investments in climate resilience and renewable energy projects," he said.

Why single African trade currency

According to Adam, Africa should use its currency to trade and tap into private sector funds to complement public finance in response to the climate crisis.

On her part, Deputy Chairperson for the African Union Commission Monique Nsanzabaganwa highlighted the long-standing goal of a common African currency as a symbol of unity and strength.

"The goal of a common African currency will be a pillar of African unity, a symbol of the strength that we hope will emerge from efforts to integrate the continent. A unified currency could make African nations more attractive to global investors," she said.

In her own words, she went on:

"A larger, more stable market would encourage foreign direct investment, leading to increased access to capital markets. These funds could be channelled towards green bonds and climate finance initiatives, helping us bridge the climate finance gap."

Barbara Creecy, the Minister of Environment, Forestry, and Fisheries from South Africa, drew attention to the critical issue of climate finance for Africa.

She said that currently, about half of the climate finance globally comes from the private sector.

“But in Africa, it makes up only 14% of the total flows," she further said.

What climate projects entail

Barbara said that climate projects often involve long-term commitments, and a common currency could provide greater confidence in the stability of investment returns, encouraging more significant flows of climate finance.

She explained that by eliminating the need for foreign exchange reserves and reducing currency risk, African nations would free up fiscal space that could be allocated to climate projects, renewable energy initiatives, and climate resilience programs. This would be a game-changer for our efforts to combat climate change.

Kenya’s Environment Cabinet Secretary Soipan Tuya emphasised the need to address Africa's debt burden in the context of climate action.

"The multinational development banks have to reconsider Africa’s debt approach, enabling African countries to tackle climate change challenges without burdensome debt."

Why the need to reform financial systems

The discussions at the summit revolved around the importance of reforming financial systems to enable post-disaster reconstruction, strengthening the African Adaptation Initiative, and delivering the UNFCCC Loss and Damage Fund.

Additionally, leaders highlighted the necessity of financial investments in universal coverage of early warning and early action systems for disaster risk reduction.

Earlier, TUKO.co.ke reported that President William Ruto shared worrying details about access to electricity and clean energy in Africa.

Ruto disclosed that energy poverty is still widespread in Africa, with around 600 million Africans lacking electricity connections.

Looking at a long-term goal, Ruto said there will be enormous possibilities with the emergence of new technologies and efficient climate financing.