New investments in form of climate finance could spark economic growth for Southern Africa economies with expected slowdown this year.
According to the African Development Bank (AfDB) the 2023 Southern Africa Economic Outlook, the region is expected to slow down in 2023 to 1.6pc, followed by a slight improvement of 2.7pc next year.
AfDB says last year, Southern Africa region’s GDP growth barely reached 2.7pc, a level much lower than global and African averages of 3.4pc and 3.8pc.
The slowdown in South Africa has been mirrored in other countries within the region such as Zimbabwe, Zambia, Malawi, Madagascar, and São Tomé and Príncipe, which have also experienced intense adverse weather events.
“Weighing down the environment further is the external debt burden which is forecast to remain high across the Southern Africa region. In 2022 it stood at 48pc,” said AfDB.
However, the region could benefit from new climate action funding given the region needs at least $1 trillion with an annual requirement of $90.3 billion until 2030.
Average annual climate finance flows to Southern Africa currently stands at $6.2 billion, a mere 6.9pc of what is required. Southern Africa, in addition, received the least financial flows relative to its financial needs, compared to other African regions, AfDB said.
“We estimate that the continent will need about $235-$250 billion annually between now and 2030 to meet investments needed under the Nationally Determined Contributions. So this leaves Africa, the African private sector and the global private sector with an investment opportunity of up to $213.4 billion annually to address climate change alone,” said Kevin Urama, AfDB Vice President and Chief Economist.
The bank is currently spearheading regional initiatives that intersect with climate adaptation, energy transition and sustainability across the entire continent.
They include among others, financial instruments, green bonds, technical expertise, climate insurance schemes, policy interventions.