African Energy Futures Mafalda Duarte African 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

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) ? ? 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 Support Transformation Inclusive Growth Across Age Across Gender Across Geography Gradual Transition to Green Growth Building Resilience Managing Natural Resources Sustainable Infrastructure

How to Support Transformation Infrastructure 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 Annual GDP Growth

How to Support Transformation Regional 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 Transformation Private 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 MSMEs 22% Access to Finance Low productivity

How to Support Transformation Governance & 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 states Weak institutions Poor service delivery

How to Support Transformation Skills & technology  Build skills: science, technology, engineering  Support women in technical & scientific study  Support innovation & entrepreneurship  Develop networks of excellence and mentoring programs 250 million Africans between 15 and 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