African Energy Futures Mafalda Duarte African Development Bank.

African Energy FuturesMafalda DuarteAfrican Development Bank

Outline

• Africa Today• Global and Africa’s Income Inequality• Global and Africa’s Environmental

Degradation• Additional Challenges due to Climate Change• How to Support Transformation• What is needed• Innovative finance• Opportunities in the Post-Rio+20 Landscape

Africa Today: Continued and robust growth…but mostly driven by commodity prices

Africa Today: Business climate is improving…but private sector still faces bottlenecks

Africa Today: Poverty is falling but unequally

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Substantial But Uneven Progress

Source: World Bank, World Development Indicators; OECD, DAC Statistics

Global Income Inequality

Africa Today: Massive infrastructure deficit

Africa Today: Regional integration and intra-regional trade needs deepening

Source: Rockström et al., Nature (2009)

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Global Environmental Degradation

Additional Challenges

Due to

Climate Change Pictures: AfDB

Impacts on water resources

• Warming expected to increase up to 1.4 ° C by 2020; 5.1 ° C by 2080

• Increase in temperature = greater evapostranspiration; e.g. 1° C warming results 10% reduction in surface runoff (Morocco)

• Changes in variability - more severe, intense, prolonged droughts and floods

• Changes in groundwater recharge

• By 2020, up to 250 million people in Africa are projected to be exposed to increased water stress

Impact on Agriculture

• Changes in pests, diseases, growing seasons, land-use

• Temperature-induced crop yield losses of up to 16% per 1° C

• Overall reductions of up to 22% across 5 crops

• By 2020, yields from rain-fed agriculture could be 50% less in some countries, affecting food security and exacerbating malnutrition

Impact on Coastal Zone and Marine Resources

Marine Resources at Risk

• 22 of 33 coastal countries “highly vulnerable” to CC impacts on fisheries are in Africa

African Cities at Risk

• 19 big cities (1 million +) in LECZ*

• Mombasa: 17% city below 0.3m

• Banjul: most below 1m• Egypt: 2 million people

below 0.5m• Abidjan, Lagos at high risk

But Opportunities Too

How to SupportTransformation

Inclusive Growth

Across Age

Across Gender

Across Geography

Gradual Transition to

Green Growth

Building Resilience

Managing Natural Resources

Sustainable Infrastructure

How to Support TransformationInfrastructure development

• Improve transport & logistics chains• Meet rising demand for energy• Enhance water resources• Expand broadband telecommunications• Integrate urban infrastructure

$30-50 Billion Annual Gap

2% of Lost AnnualGDP Growth

How to Support TransformationRegional integration

• Hard infrastructure • Support soft infrastructure• Trade and Customs procedures• Movement of labor and capital• One stop border posts

Only 12% of Africa’s Trade is Intra-Regional

How to Support TransformationPrivate sector development

• Improve investment and business climate

• Expand access to infrastructure• Promote enterprise development• Improve access to finance• Scale up support to MSMEs

50 million MSMEs22% Access to Finance

Low productivity

How to Support TransformationGovernance & accountability

Build accountability: public spending, delivery Support anti-corruption initiatives Strengthen debt-management capacity Promote fiscal decentralization Bolster property rights, access to justice Improve natural resource management

20% live in fragile statesWeak institutions

Poor service delivery

How to Support TransformationSkills & technology

Build skills: science, technology, engineering

Support women in technical & scientific study

Support innovation & entrepreneurship Develop networks of excellence and

mentoring programs

250 million Africansbetween 15 and 24

15 million new job seekers annually

TAILORED STRATEGIES, POLICIES THAT PROMOTE SMART BEHAVIOR AND TACKLE UPFRONT CAPITAL CONSTRAINTS

What is Needed

Innovative Finance

• Focus on upfront financing: – Need for new sources, but also project preparation finance and

risk-management schemes– Borrowing constraints– SMEs and local governments

• Green finance, but also: – Leverage public and IFI resources: engage private banks; Fund-

of-funds; buy down interest rates– Local public finance– Payment for environmental services

Opportunities in the Post-Rio+20 Landscape• SDGs and the post-2015 int’l development agenda

– “Shared prosperity” and the challenge and imperative of integrating sustainability into the poverty-centric MDG framework

• Natural Capital Accounting (NCA) + WAVES– UN Statistical Commission adopted a System for Environmental-

Economic Accounts, and 60+ countries embraced NCA at Rio

• Data, tools and knowledge– Clear demand from advanced and developing countries for

better information and methods and opportunities to share good (and failed) practices

Targeting and Tailoring

Thank You!!

Mafalda Duarte

[email protected]