Billions needed to prepare Africa’s cities for climate change

The report estimates that the greening of the continent’s cities could produce huge economic dividends for Africa over the next three decades, running into the hundreds of billions of dollars.

CAPE TOWN, September 28 (ANA) – A new report from the Coalition for Urban Transitions (CUT) and FSD Africa has noted that the economic benefits from investing for climate readiness in African cities would far outweigh the cost.

According to the report released on Monday, Africa has a unique opportunity to address both the threat from climate change and to tackle the urban sprawl associated with rapid urbanisation.

Based on an analysis of cities in three countries, namely Ethiopia, South Africa and Kenya, which combined represent 18% of Africa’s urban population, the report estimates that the greening of the continent’s cities could produce huge economic dividends for Africa over the next three decades, running into the hundreds of billions of dollars.

The report, launched at Africa Climate Week from September 26 to 29, proposes a new model for urban growth in Africa that emphasises compact neighbourhood development, connected infrastructure, clean technologies and climate resilient planning.

Doing so will create hundreds of thousands of jobs, improve health, reduce pollution and raise productivity across the continent while reducing carbon emissions and making cities more resilient to rising temperatures.

An economic analysis commissioned for the report shows that across the 35 major cities in the three countries, delivering more compact, clean and connected development will require additional investment of US$280 billion but produce a return of US$1.1 trillion by 2050, equivalent to US$330 billion in today’s terms.

The benefits include energy savings and other avoided costs, such as reduced vehicle costs and material costs for construction, as well as the creation of 400,000 jobs.

African cities are displaying the fastest growth rate in the world and are expected to see their populations double over the next 40 years. However, 79 of the continent’s fastest-growing urban areas are at extreme risk from climate change.

The report notes that this risk could be exacerbated if African nations lock in a pathway to economic development that involves high levels of emissions. If all inhabitants of African countries raised their emissions intensity to match the continent’s most intense emitter, South Africa, it would be enough to raise global temperatures by 1°C.

To deliver compact, connected and clean urban development, cities in Ethiopia, Kenya and South Africa would require additional investment of US$42 billion, US$27 billion and US$215 billion, respectively, by 2050.

The report warns that the capacity of city authorities to meet this requirement is limited by budgetary constraints, high debt levels, unstable interest rates and a lack of creditworthiness, coupled with a lack of regulatory assistance, inefficient revenue collection and a lack of institutional capacity.

Despite these barriers, FSD Africa and CUT have argued that the finance required for urban transformation could be unlocked by establishing robust national urban policies, empowering city authorities, rolling out initiatives to improve creditworthiness and implementing mechanisms that capture increases in land value from infrastructure improvements.

The report also identified six financial instruments that could be used to mobilise investment in clean urban infrastructure, including innovative schemes such as insurance pools to provide infrastructure repairs following extreme weather events, and pay-as-you-use subscriptions for cooling buildings. City authorities could also leverage green bonds, public-private partnership and leasing agreements with utility providers that help mitigate the high upfront cost of green infrastructure.

Mark Napier, CEO of FSD Africa, said: “Africa’s destiny will be determined by the way its cities develop.… We firmly believe that with well-structured green investment it is possible to deliver both environmental benefits and strong economic growth at the same time.”

Nick Godfrey, director of CUT, said: “National governments that grasp the urgency of the challenges facing African cities and respond with strong leadership will be well placed to unlock green investment. Whilst the scale of the investment needed is significant, the economic dividends are far greater and there are existing mechanisms capable of financing a more sustainable, healthier and prosperous urban future across Africa.”

– African News Agency (ANA); Editing by Yaron Blecher