Africa already needs a minimum of $2.5 trillion to implement its climate action commitments. Even as COP26 in Glasgow agreed to double the $100 billion pledge to developing countries, this means that even if the pledges were honoured, the gap would still be significant for Africa. If we look at just two countries, for example, Ghana needs anywhere from $9.3 to $15.5 billion to implement its climate action plans. Uganda needs $2.9 billion for adaptation and $5.4 billion for mitigation. The key is that implementation costs are exorbitant and public finance alone is inadequate. Over the years, the total climate financing to Africa has not yet reached $10 billion – not even sufficient for just Uganda and Ghana not to mention the entire continent of Africa.

At the same time, Africa already invests in adaptation at a rate of 2% of GDP each year. The question is how the region can bridge the finance gap using what it already has. Through our work, we support countries to put in place structures to attract market investments – both local and international – and lessons from these countries will be expanded to inform all 54 countries with gaps in this area.

The need for practical tools to inform optimal implementation trajectories for countries is now in full swing. Countries will need tools to inform them on the optimal areas of return that these investments should be channeled to. Tools in the form of investment plans and multi-sectorial policy coordination – to ensure a ready platform to operationalize these critical aspects of the Paris Agreement that the Glasgow pact has now energized are crucial.

This is to say that the region can leverage Article 6 of the Paris Agreement to mobilise market financing to drive key NDC’s action in agriculture and clean energy. For example, Article 6.2 on Internationally-Transferred Mitigation Outcomes (ITMO) allows countries that are considered the highest emitters to partner with low emitters across the globe – including in Africa – and agree on how their high emissions can be offset through investing in supporting a low emission action within the territories of low emitters. Africa, due to its negligible emissions, is a natural supply market here.

But the key to Africa’s benefit should be on how well such market mechanisms are tied to catalyse the growth of competitive low carbon enterprises on the continent. While typical areas of investment have been in reforestation, Africa should take a strategic stance and prioritise how any collaborations towards reforestation will enhance much-needed economic productivity.

Creating jobs for youth, enhancing food security to drive a trajectory of competitive economies is critical. Here, collaboration to invest in clean energy aligned to powering agriculture value addition enterprises will be unlocking up to $48 billion worth of PHLs, as positive financing tied to power a just transition. Africa should look at investing its 2% of GDP contribution to climate action to forging collaborations under Article 6 that unlock such tangible enterprises to implement up to 70% of its NDCs while unlocking key socioeconomic opportunities to drive a just transition.

Some of the money pledged and promised will go to developing countries to restore damaged land. The above opportunities for Africa should inform how this money is utilised to drive the implementation of NDCs. Indirect financing through incentivizing critical constituencies of implementers in Africa is vital. These resources should be used to incentivize a shift to non-typical sources such as microfinance and cooperatives that are most accessible to most Africans in the informal sector and most vulnerable. Leveraging the informal sector that provides livelihoods for up to 80% of Africans and the youth to invest in enterprise actions that drive the realization of country NDCs is a critical niche to tap. Africa’s informal sector, as well as its youth, are already engaged in various actions.

In addition to looking at new sources of investment, we need to look at catalyzing a shift of investments by these actors who are the majority players in Africa’s economies. This is how the finance gap in Africa can be close as we supercharge and turbocharge the informal sector to become socio-economically viable. This will be when climate action financing will matter to the most vulnerable to the continent and elsewhere.

The views expressed in this article are those of the authors alone and do not necessarily reflect those of any institutions with which the authors are associated.