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| This page was last modified on Saturday, February 12, 2011 07:03:32 PM
Africa must plan for climate change to maintain economic growth, says World Bank Saturday, February 12, 2011 08:03:32 PM
 
Even as it is becoming evident that Africa holds the potential to be a dynamic growth pole in the rapidly evolving world economy, the region needs to urgently tackle increased climate variability and temperature increases to maintain its performance and preserve recent gains, says a World Bank report earlier in the week.
The World Development Report 2010: Development and Climate Change, released in advance of the December meetings on climate change in Copenhagen, cites evidence that global warming of 2 degrees C above pre-industrial temperatures could result in permanent reductions in annual per capita consumption of 4 to 5% in Africa. The authors call for immediate action to ensure that Africa's prospects are not compromised by climate variability and climate change.
At the global level, rich countries, which produced most of the greenhouse gas emissions of the past, must act now to ensure that the world is not locked into an unsafe climate, the report says. They need to adopt ambitious emission reduction targets at home-which would also boost demand for alternative energy sources-as well as provide financial support to developing countries for adaptation and to lay the foundations for low-carbon growth.
"Countries in Sub-Saharan Africa are disproportionately affected by climate change," said Marianne Fay, co-director of the report and Chief Economist for Sustainable Development at the World Bank."They need scaled-up financial and technological support to help vulnerable people adapt to climate change, while also meeting urgent energy needs."
While climate variability is not a new factor in Africa's history, the incidence and severity of extreme weather events, both floods and droughts, has increased sharply in recent years, and climate projections indicate that this trend will be intensified. The region's natural vulnerability will thus be increased with climate change.
There could be serious impacts on people who depend on rainfed agriculture, which employs about 70% of Africa's population. Without strong improvements in agricultural productivity, the region's food security will be at risk. 
Kenyans are experiencing the impact of climate change through serious food, water supply and electricity shortfalls that are also draining budgetary resources and dampening prospects for economic recovery from the global economic crisis.
"In Africa, adaptation and climate risk management are becoming core development objectives, as governments and citizens become more aware of the impact of climate change on their survival," said Johannes Zutt, World Bank Country Director for Kenya. "In Kenya, Bank support to initiatives like the Arid Lands Resource Management project and the Western Kenya Community Driven Development and Flood Mitigation project demonstrate our commitment to this integrated agenda," said Zutt, who is also in charge of Comoros, Eritrea, Rwanda, Seychelles and Somalia.
Access to energy is critical for economic growth and poverty alleviation in the region; no country in the world has developed without adequate power supply. In Africa, where wood, charcoal, and other biomass provide about 80% of the domestic primary energy supply, over 550 million people lack access to modern energy. The region has huge potential for untapped hydro, solar, wind and other renewable sources of energy; but tapping these resources will require both technology and finance. It also has non-renewable resources, including coal, which some countries will need to draw on quickly to reduce energy poverty and increase energy equity.
Africa can reap considerable opportunities from climate change. Better land and water management, and attention to climate-related diseases like malaria would be good for economic growth. Also, mainstreaming climate-resilience into development costs less than coping with relief, rehabilitation and recovery associated with more frequent natural disasters.
The World Bank's new climate strategy for the region, Making Development Climate Resilient, also focuses on knowledge and capacity development, scaling up financing, and on mitigation opportunities. While Africa contributes less than 4% of global CO2 emissions, most of its mitigation opportunities are linked to improvements such as sustainable land and forest management that bring solid development benefits. Over 60 World Bank-supported projects in Africa take into account the importance of combating climate change.
Innovation plays a big role in solving the climate dilemma, the report says. For example, early results from two pilot agricultural carbon finance projects in western Kenya show that smallholder agriculture can be integrated successfully into carbon finance. The World Bank's BioCarbon Fund is purchasing the carbon credits from these projects.
At a glance: Africa's development in a changing climate
* The World Bank's latest GDP growth projection for Sub-Saharan Africa for 2010 is 3.7 %, compared with 1.3% for rich countries as a group and 2.5% for developing countries as a group excluding India and China.
* Climate experts estimate that global warming of 2 degrees C above pre-industrial temperatures could result in permanent reductions in annual per capita consumption of 4-5% in Africa (Nordhaus & Boyer, 2000; Stern, 2007). This could also likely destroy 10-15 % of species (Parry and others 2007).
* Rainfed agriculture contributes about 30% of the region's GDP, but that source of income may start drying up. By 2080, as much as 9-20% of the region's arable land will become much less suitable for agriculture. Even today, about 86% of the land in Sub-Saharan Africa is moisture-stressed.
* Africa suffers from natural fragility (two-thirds of its surface area is desert or dry land) and high exposure to droughts and floods, which will likely increase with climate change. Devastating floods, once rare, have been reported across the region. In 2000, flooding in Mozambique cost the country an estimated $550 million, lowering national GDP by 1.5%.
* Africanis rapidly urbanizing, with the urban population set to exceed the rural by 2030. About 300 million additional urban residents are expected over the next 25 years, making climate-resilient urban planning critical.
* By 2030, 90 million more people in Africa will be exposed to malaria, a climate-related disease. This is a 14% increase (Hay and others, 2006).
* More than 550 million Africans lack access to electricity and 25 countries in Sub-Saharan Africa are currently in a state of power crisis. On average, only 24% of the population has access to modern energy. In Rwanda 93 in 100 people have no access; in the Democratic Republic of Congo, 94 in 100 people have no access.
* Biomass provides 80% of the primary domestic energy supply. Indoor air pollution from burning biomass contributes to the respiratory infections that cause 17% of deaths among children under age five.
* The region has huge potential for renewable energy: it has only used 8% of its hydropower potential, compared, for example, to 30% in Latin America. However, exploiting these resources requires both technology and finance.
* Several countries in Africa are beginning to participate in efforts to reduce emissions from deforestation and land degradation (REDD). Big potential benefits could come from future REDD instruments for Africa.
* As poor people are exposed to climate change, social protection systems become even more important. Ethiopia's productive safety net project includes a strong focus on watershed protection, thus implementing adaptation strategies to mitigate the effect of droughts and floods on agricultural land.
* Africa is in dire need of better monitoring and forecasting systems. According to the World Meteorological Organization, Africa has only one weather station per 26,000 sq km - one-eighth the recommended minimum (Science and Development Network, 2006).
Public Agenda Ecobank to Arrange $300 Million Ghana Refinery Loan 
Ecobank Transnational Ltd., the Lome, Togo-based lender, said it will “arrange and syndicate” a $300 million facility to finance the debt of Ghana’s sole oil refinery.
Ecobank’s investment branch, Ecobank Development Corp., was contracted by the Ghanaian government to “advise on the financial restructuring of Tema Oil Refinery,” Chief Executive Officer Arnold Ekpe said in a statement published in the Accra- based Ghanaian Times today. Ecobank’s Ghanaian unit will also act as an adviser.
The advisers will review the refinery’s debt and arrange another facility of $300 million to “strengthen Tema Oil Refinery’s balance sheet,” Ekpe said.
The state-owned refinery, based about 30 kilometers (19 miles) from the capital, Accra, has been out of operation since early this year for maintenance and recently because of difficulties it is having in sourcing supplies of crude. The refinery has a capacity of 45,000 barrels-per-day.
Ghana is set to become one of Africa’s newest oil exporters in late 2010 when production begins at the offshore Jubilee field, which was discovered in June 2007 and has potential resources of as much as 1.8 billion barrels, according to Tullow Oil Plc.
Ecobank Development Corp. was co-adviser on Ghana’s $750 million sovereign bond and lead adviser on its sale of Ghana Telecom to London-based Vodaphone Plc., according to the statement.
Breaking the inflation jinx
…Abundant food is a must
The inflation figure announced by the Ghana Statistical Service (GSS) shows that August 2009 inflation rate has dropped to 19.65%, representing a decrease of 0.85 percentage points from the July 2009 figure of 20.50%.
This, according to figures available, follows a three year trend of dipping inflation between July and September.
According to the Government Statistician, Grace Bediako, the August inflation is the lowest so far in 2009, a year which has witnessed relatively high inflationary trends, with the monthly change rate of -0.69% also representing the lowest in the year.
Dr. Bediako noted that Non-Food Inflation has been higher than Food Inflation with the difference between the two still widening. Whilst Non-Food inflation was 23.25% in the month, Food inflation recorded 14.75%.
Eastern Region registered the lowest inflation of 14.48 %, whilst the Upper East and Upper West regions recorded the highest of 33.29%. The urban and rural inflation for August 2009 was 22.37 % and 18.86 % respectively.
Experts in the field are watching closely whether, Ghana can for once break the jinx by sustaining the disinflation trends beyond November.
The Government Statistician however cautioned that the drop in inflation which follows exactly the patterns of the previous three years, might not be sustainable, giving credence to the assertion by the Centre for Economic Policy Analysis (CEPA) that end-year inflation could be above 20%.
"Looking at the trend, there is no reason to suggest that the rate will go down during the last two months of the year unless food prices hold out," she added.
She said as long as food inflation picks up around the end of year, coupled with the annual price hikes in December, high inflation could resume by that period.
This assertion comes against government’s reviewed target of 14.5 % end-of-year inflation.
Head of Economic Statistics at the GSS, Magnus Ebo Duncan believes for the disinflation trends to be sustained, the factors that push up inflation especially around the end of year should be dealt with effectively.
According to Mr. Duncan, food prices are one of the major factors contributing to inflation. He observed that inflation always eases during the harvest season, “but as soon as people begin to store up food, waiting for prices to peak before releasing them onto the market, prices shoot up again.”
The economic statistician called for an all-year-round farming especially in food items that have very fluctuating prices, with inflationary consequences for the economy. “If we do this, there would be an abundant food supply all year round, thereby leaving no incentive for hoarding food.”
He explained that for that to succeed however, irrigation facilities need to be put in place.
Mr. Duncan therefore lauded government’s decision to rehabilitate 41 dams in the three Northern Regions to support dry season farming. He believes when this is done, the production of maize, rice, millet and other cereals done in those areas would receive a boost.
He also believes that food processing needs to be encouraged, while storage facilities need to be established all over the country to prevent the wastage that goes on when there is a glut in the markets.
Government’s 14.5 year-end inflation target appears to be coming on the expected abundant food supply that the Minister for Food and Agriculture Kwesi Ahwoi has been promising for this year.
In addition to the bumper harvest, government has also promised to rehabilitate all the warehouses of the defunct Ghana Food Distribution Company (GFDC) in which surplus grain bought from farmers would be stored up.
Government is also promoting a Commodities Exchange where food crop prices would be determined a la companies’ stock tradings on the Stock Exchange.
In its mid-year budget review, government released GH¢ 10.7 million for its Youth-in-Agriculture program.
In March when the budget was released, the Centre for Budget Advocacy (CBA) called for bold initiatives to insulate the nation against the food, fuel and financial crisis. They actually called for subsidies for farmers which are needed to ensure abundant food production that will make the country food-secure.
Organisations such as the General Agricultural Workers Union (GAWU) and their partners Actionaid also believe that subsidies such as the one on fertilizer, and availability of affordable financial intermediation for Ghanaian farmers would ensure massive production of food that will make Ghana able to feed her people.
Source: Financial Intelligence (Justice Lee Adoboe) also available on wwwmyfinancialintelligence.blogspot.com
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