CAPE TOWN – The government has successfully raised $3.3 billion from Multilateral Development Banks and International Finance Institutions to bolster its climate change, energy, and just transition objectives. This funding aims to support a wide range of initiatives, from adaptation and mitigation efforts to the transition to sustainable energy sources.
According to South African Government News Agency, who spoke during the 2024 National Budget Speech, the National Treasury is at the forefront of mobilizing these resources. The Treasury’s strategies include designing incentives and shaping policies to integrate climate considerations into the mainstream of governmental planning and budgeting. Godongwana emphasized the development of a multi-layered, risk-based approach to manage fiscal risks associated with climate-related disasters. This approach incorporates various funding instruments, ranging from grants to contingency funds and the Climate Change Response Fund, tailored to the specific nature and severity of disaster events.
The National Treasury is also revising its approach to disaster response grants to enhance efficiency and promote disaster planning, preparedness, and risk reduction efforts. Furthermore, the development of a climate-budget tagging framework is underway to ensure that climate-related expenditures are accurately tracked within public budgets, thereby influencing policy and financial decisions towards climate-conscious outcomes.
Godongwana highlighted the critical role of concessional funding from institutions like the Multilateral Development Banks in supporting the country’s climate goals. He also mentioned the importance of engaging the private sector in managing climate disaster funds and the government’s active participation in climate negotiations aimed at reforming multilateral finance institutions.
The Minister revealed ongoing collaborations with eight municipalities to provide technical assistance for climate-responsive capital projects, aiming to adapt to and mitigate the effects of climate and weather-related events. The 2024 National Treasury Budget Review indicates that the department is finalizing a disaster risk financing strategy that leverages innovative financing and risk transfer mechanisms to mitigate the impacts of climate change effectively.
This strategy is expected to enhance the state’s capacity to fund disaster recovery efforts and extend insurance mechanisms to mitigate the financial impacts of natural disasters on the economy and vulnerable communities.