President William Ruto’s visit to Germany last week presented a unique opportunity for Germany to position itself as a global leader in supporting Africa’s climate and development goals. But, can Ruto's visit secure Germany's commitment to increased financial support for Africa? David Ryfisch, Head of the Division of Future-proof Finance at Germanwatch, joins CNBC Africa for deeper insights.
And on to our big conversation this morning. President William Ruto's visit to Germany last week presented a unique opportunity for Germany to position itself as a global leader in supporting Africa's climate and development goals. But, can Ruto's visit secure Germany's commitment to increased financial support for Africa? David Ryfisch, Head of the Division of Future-proof Finance at Germanwatch, joins us for deeper insights. David, thank you so much for joining us. And just to recap, earlier this year, the Africa Heads of State, Germany was a top five contributor to the $93 billion US IDA replenishment, with 70% of it going to Africa. So, how is Germany currently positioned in terms of increasing its financial contributions to Africa in response to global climate finance needs? And also, from where you sit, what indicators suggest that Germany might increase or enhance its support? Thank you very much for having me, and good morning from Germany. So, Germany has always honoured its multilateral international commitments, and that includes the International Development Association, IDA. And IDA has a high priority for Germany. Having said that, we cannot expect at this point an increase for the forthcoming IDA replenishment from Germany. Instead, we can only hope that Germany will maintain its level of commitment that it had for the previous IDA replenishment, and stay on that level. The reason is that Germany faces some significant budget constraints. In fact, the budget negotiations in parliament are ongoing for next year, and Germany is cutting its climate and development finance, which is obviously detrimental if we think that Germany wants to be perceived in Africa, but also in the world, as a global partner, a trusted partner and leader on these aspects of climate and development finance. And to also add to that, we also saw that the president added, on behalf of African heads of state, he asked the World Bank to top up the $90 billion to at least $120 billion, so that Africa can meet its climate finance goal and needs. But let us look at some of the most critical reforms that we are seeing here, which are needed in the global financial system to support climate resilience and development, sustainable development in Africa, and how are we seeing Germany in this retrospect contributing to or influencing some of these reform effects? Yeah, these reform effects are extremely important if we want to meet the development and climate finance needs that especially Africa has. And you mentioned William Ruto's visit to Germany. In fact, Kenya has been one of the driving forces of this agenda. Germany has contributed with Kenya, for example, by moving forward with a so-called expert group on debt, nature, and climate. This expert group is supposed to present suggestions on how we can improve the existing debt, the global debt system. We know it's heavily flawed. We see lots of African countries that are under heavy debt distress, when in fact we need a lot of additional finance to respond to the climate and development needs. So there, effectively, Germany is cooperating with Kenya, for example. Germany also is pushing other debt instruments, like a debt for climate or debt for nature swap, so where debt is forgiven so that countries use that extra physical space for climate action. Germany is also working on implementing so-called debt pause clauses. So when an extreme weather event hits, there's a pause in the debt and interest repayment. But at the same time, unfortunately, Germany is not on board yet for a deeper transformation of the debt system. We know that, for example, the G20 common framework has not delivered as expected, with much delays, and we are still stuck in the too little too late situation. So it's really a mixed bag on the debt question. Where Germany has been leading is on the multilateral development banks. Germany has been one of the key driving countries to really push forward on reform, being it in the World Bank, but also in the African Development Bank. Looking at the International Monetary Fund, where we know that recently that was on top of the news in Africa, especially in Kenya. Unfortunately there, Germany has a very conservative stance and is not one of the driving forces to reform the International Monetary Fund to, for example, reflect more the impact of climate change. The reason is that Germany's Ministry of Finance, but also the central bank, is known and has historically been really on the conservative side. And that's quite a number of factors we are seeing there in terms of some of the impact of EIDA contributions we are seeing from Germany contributions. But let us look at the Hamburg Sustainability Conference. How do you anticipate it will impact Germany's climate finance policies and its support for Africa? I think the issue here, or the question here, is policies. And also maybe what are some of the key outcomes or commitment might emerge from these events? So the Hamburg Sustainability Conference has its first edition now in October. It's really driven by Germany's Ministry for Economic Cooperation Development and the Chancellery. The idea is to have a conference on sustainability, that will be as important as the Munich Security Conference, that is a long-established exchange. We do not expect huge financial contributions, given the budget situation that I stated. But Germany wants to clearly show its support and partnership with the African continent. The African continent is on top of the German agenda, certainly. One element where we expect some announcements, probably in terms of also potential policy strategies, project, is the area of hydrogen, and specifically green hydrogen, where Germany sees significant potential for partnership, especially with the African continent. And you mentioned hydrogen there, and I pick my interest on some of the expectations for COP 29. What can we expect coming up, you know, fast forward COP 29, and also looking at regarding the developed countries' climate finance commitments, you know, particularly from Germany, and also Germany's stance at COP 29 in terms of shaping the future, in terms of the financial support for Africa? COP 29 will be extremely important, because we will determine a new collective quantified goal on climate finance. So, practically, we're talking about climate finance for the time after 2025. And a pre-COP meeting, essentially, happened last week in Baku in Azerbaijan already. There was some progress, but parties are still very far from coming to an agreement. It is very important that developed countries, like Germany, come forward and show that they are serious about their support for countries in Africa, but also other developing countries. And it will also mean, though, that besides countries like Germany, also other countries that have the capacity economically, and also the responsibility historically in terms of emission, contribute. I'm thinking, for example, about the countries in the Gulf region that have a very strong potential to also contribute with finance to respond to the climate crisis. And countries will need to agree on that in Baku in November. And the outcome will be of the utmost importance for the African continent, because we know that the African needs both to respond to the impact of climate change, respond to the losses and damages that are already brought about by climate change, but also to finance their own investments in renewable energy, for example, in sustainable transport, in a decarbonized industry. So for Africa, it's certainly on top of the list that we get a strong outcome at COP29 on this new climate finance goal. Yes, indeed. David, thank you so much for those great insights. What I'm getting from that is that it's a mixed bag when it comes to the policies and also Africa's position in terms of securing additional financing from Germany, and also maybe looking at it from a retrospect of what is Africa's plan for Africa. So, David, thank you so much for those great
Theme: Challenges and Opportunities in Germany's Financial Support for Africa
President William Ruto's recent visit to Germany sparked discussions on the potential for increased financial support for Africa. Germany has been a significant contributor to global climate and development goals, with a focus on aiding African countries. However, David Ryfisch, Head of the Division of Future-proof Finance at Germanwatch, shared insights that shed light on the challenges and opportunities ahead. Germany's position in increasing financial contributions to Africa is crucial, given the pressing global climate finance needs. Despite being a top donor to the International Development Association (IDA) replenishment, Germany faces budget constraints that may hinder a significant increase in contributions. The ongoing budget negotiations in parliament are indicative of potential challenges in maintaining previous levels of commitment. Ryfisch emphasized the importance of reforms in the global financial system to support climate resilience and sustainable development in Africa. While Germany has collaborated with Kenya on debt, nature, and climate issues, there are mixed outcomes in pushing for deeper transformations in the debt system. The country has played a leading role in multilateral development banks' reforms, yet displays a conservative stance in certain aspects, such as the International Monetary Fund. The Hamburg Sustainability Conference exemplifies Germany's commitment to sustainability and partnership with Africa. The conference's focus on green hydrogen projects highlights potential areas of collaboration with the African continent. Looking ahead to COP29, Ryfisch highlighted the significance of developing a new collective goal on climate finance post-2025. Developed countries, including Germany, are urged to showcase genuine support for African and other developing nations. The outcome of COP29 will be crucial for Africa, as it directly impacts their ability to address climate impacts and invest in sustainable development. In conclusion, while challenges lie ahead in securing increased financial support, collaborations and policy commitments are essential in bridging the gap and advancing climate and development finance in Africa.
"In conclusion, while challenges lie ahead in securing increased financial support, collaborations and policy commitments are essential in bridging the gap and advancing climate and development finance in Africa."
['Germany', 'Africa', 'Financial Support', 'Climate Finance', 'Development Goals']